Mar 22

“I’ve been left a gift in a Will – but I don’t want it”

Written by Jessica Toller
Associate

DDI: 01423 726606
E: jessica.toller@raworths.co.uk

It might not be often you hear those words but that’s exactly what Rhona said on Emmerdale on Monday (28 February). Upon hearing that her abusive deceased ex-husband Pierce had left her £50,000 in his Will, Rhona exclaimed that she didn’t want it, give it to an abuse charity instead. Unfortunately she was advised that they couldn’t do that; if she didn’t want the money then it would go into trust for her disabled son and there was nothing she could do about it.

Is this correct? As is often the case, the answer is yes and no, because it depends on what she wants to do.

Option A – she disclaims/rejects the gift in its entirety.

Rhona would only be able to do this if she had not received the gift.  By disclaiming the gift, the gift in the Will would fail and the money would be distributed in accordance with the Will provisions. This could mean that it falls into the residue of the estate, or there could be alternative provisions.

In this scenario it sounds like Pierce had put provisions in place and so should Rhona disclaim the gift then the money would pass into a trust for her son which would be against her wishes. Given his age and disability, Rhona would not have any rights to amend the gift should it pass this way.

Could Rhona do anything to prevent this?

Yes.

Option B is for Rhona to prepare a deed of variation which would vary her gift under the Will.

Using a deed of variation Rhona can re-direct the money to any person or organisation she would like provided she does so within two years of Pierce’s death. She could also choose to split the money into different shares, or keep some, whatever she would like to do. The advantage of this approach is that the money would never touch her estate at all, it is seen as a gift from the Will and Rhona would not have to feel that the money has touched her hands at all.

Option C is for Rhona to take the gift and then give the money to a charity herself.

This would be the simplest method but the money would then “flow” through Rhona and her estate to pass to the charity so it depends if she would be happy with that.

Deeds of variation are often used when considering your own tax planning objectives because the gift is not seen as a gift from the original gift recipient (Rhona), but instead as a gift from the deceased (Pierce). If Rhona has a likely inheritance tax liability on her own estate, she could prevent the future liability from increasing by virtue of Pierce’s gift.

In this scenario the deed of variation would not have any tax advantages because gifts to charities are tax exempt, but should she wish to divert the inheritance to someone else, Pierce’s son perhaps, then if she did this via option C, then this would be seen as a gift from herself and could have negative inheritance tax consequences.

Whilst it can appear straightforward, there are often many issues to consider before rejecting or giving away an inheritance. If you would like to discuss this, please contact Jessica Toller in our Trusts, Wills and Estates team on 01423 566666.

Published on 3 March 2022