Not everyone is happy to receive an inheritance. They may not need the property or money. It may be more trouble than it’s worth (due to tax or the cost of maintenance), or there could be issues between the deceased and the beneficiary that mean the latter is not happy to receive anything from the former, no matter what it is. Whatever the reason, is it possible to say no when a will is executed?
The answer is that if you inherit something, you can’t simply say you don’t want it and walk away. But there are other things you can do to ensure the money, property, or possessions don’t reach you.
One way to get around the problem is for the beneficiary to gift their inheritance to someone else – another family member. This could, however, still cause problems when it comes to inheritance tax or capital gains tax, so it may not be the perfect solution.
Another option would be for the beneficiary to completed a deed of variation, which would then alter the will so that another person receives the inheritance, or it is put into a trust if that makes more sense. Certain conditions must be met in order to do this, but it is possible.
Things become slightly more difficult when the will has provided for a minor, or even an unborn baby. This is because those who are affected by the will have to be the ones to request the variation. A minor can’t do that and neither, obviously, can an unborn child.
A deed of variation can significantly reduce your tax bill, and it can, if worked out correctly, allow for a large inheritance to be passed to the next generation without it needing to be a gift for which there must be a wait of seven years.
It is best to speak to an expert if you are considering this course of action.
Deed of Variation – passing on money to your children
A Deed of Variation allows you as a beneficiary to amend or alter the will in question for a range of reasons – should all other beneficiaries agree to the changes you wish to be made.
A newspaper recently printed a case whereby a mother stood to inherit £16,000 and wanted instead to give it to her son, who was buying a home and, like many young people, was hoping for financial assistance.
The woman was advised that a Deed of Variation would allow her to request that the money be passed to her son, rather than to her, allowing her to help him with the property purchase.
This would also then mean that the £16,000 would never form part of the parents’ estate and so would not attract inheritance tax liability.
This is an excellent example of how an unexpected inheritance can cause problems in the long run for some beneficiaries – and how best to plan its usage so that any potential inheritance tax challenges can be overcome.