Giving away a legacy

Why would you want to do this?

If you are a beneficiary of a Will, you may be thinking about giving away a legacy or varying the gifts you have received under a Will.

  • For example, you may prefer that your children or grandchildren received the assets, or there may have been changes within the family that make the existing distribution unfair.
  • Or you may wish to give away a legacy or change the distribution because doing so will reduce the Inheritance Tax payable on the estate of the person who has died.

What can the beneficiaries do?

Whilst you can give away a legacy, you can also make any arrangement you choose with the other beneficiaries to redistribute the estate, and can make gifts from the assets you receive. However, doing so could create a tax cost for you.

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To avoid the tax problem, it is possible for you to give away a legacy by use of a Deed of Variation of the Will.

This means that you, the original beneficiary, can pass assets to another person or persons, without creating an Inheritance Tax or Capital Gains Tax consequence for yourself.

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Refuse to accept the gift

Another way of changing the destination of the assets is to refuse to accept the gift.  If you choose to ‘disclaim’ the gift, it will pass to the beneficiary who is next entitled under the terms of the Will, or the intestacy. 

There are strict rules for varying the gifts given under a Will or intestacy, and if you do not comply with the rules, the variation will not be effective for Inheritance Tax or Capital Gains Tax purposes.

Read about the requirements of HM Revenue & Customs here.

You have to be certain that you wish to give away your legacy or vary the destination of the gift you have received, as it is not possible to change the destination of a gift more than once.

Variations and executors

Whilst the beneficiaries can make changes to the destination of the gifts, it is not possible for the executors to decide to vary the estate and distribute the assets otherwise than in accordance with the terms of the Will, or of the intestacy.  The variation must be made by the beneficiary or beneficiaries.

For example, Tom, Dick and Harry are beneficiaries of the Will of Jack Spratt.  Tom is given a legacy of £25,000, and Dick and Harry are to share the remainder of the estate.  Dick is also an executor.

Dick and Harry think the distribution of Jack Spratt’s estate is unfair.  They agree with Tom to vary the gifts under the Will, so that the estate is divided equally between all three of them.

Dick is able to join in the variation because he is varying the gift he receives as a beneficiary.  He is not making the variation in his capacity as executor.

If you would like to know more about giving away a legacy or varying the estate of someone who has died, please make a free enquiry. All initial enquiries are without cost or obligation, so please call us now on 01308 424808 , email enquiries@winterbornelegal.co.uk or complete our Free Online Enquiry Form

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