The Lemon Fool

A UK citizen who is UK-domiciled but tax resident abroad receives a bequest under a will written in England by a UK citizen who is resident in England. Can that beneficiary write a Deed of Variation subject to the law of England and Wales? His purpose is to divert the bequest to his minor children (with an eventual view to paying for education) who live abroad with him.

If the DoV diverted the bequest to bare trusts for the children would those trusts be English Trusts (assuming the trustees are UK resident)?

Why doesn't the beneficiary simply give the money to his children? If he's tax resident abroad then it presumably wouldn't count as a Potentially Exempt Transfer, which is the only reason not do so in most cases.

Clitheroekid wrote:Why doesn't the beneficiary simply give the money to his children? If he's tax resident abroad then it presumably wouldn't count as a Potentially Exempt Transfer, which is the only reason not do so in most cases.

I believe there are places (Germany, some US States etc) that levy an inheritance tax as a beneficiary, rather than on the estate, on residents; without known precisely where the citizen is resident it's hard to know what action might be best.

I guess the question of whether a deed of variation subject to English law can be written by someone resident elsewhere might be addressed without knowing if it is worthwhile?

On the face of it, I can't see why the DOV can't be written by a non UK resident. It simply varies that person's entitlement under the Will in favour of someone else. As long as there are no IHT consequences, the Revenue does not even need to be informed, as I understand it.

Some countries don't recognise the existence of a trust (eg Denmark). Anyway a bare trust is usually simply a mechanism whereby investments are registered with an adult as nominee because minors cannot be registered owners. It has no tax consequences and in this country nothing needed to be registered about a bare trust until the wretched Trust Registration System was recently introduced. A bare trust does not even need a trust deed. It is deemed to exist if investments are held by someone as nominee for a minor.

I guess this really does all depend on where those involved are tax resident.