Deed of Variation

[Donchik]

Hello,

After the passing of my father I was appointed the executor in his Will, and have obtained probate, and in most respects completed the administration of his Will.

The majority of the estate was passed to my Brother and Sister, and the Will clearly stated that the testamentary expenses would be met equally between my Brother and Sister (i.e. 50/50)

Because my brother was married, it was in his interest to use a "Deed of Variation" so that his inheritance was equally split between his wife and himself. As executor I agreed to this alteration because it cost nothing, and would be advantageous to him from a tax perspective going forward.

When all this had been completed and I presented the testamentary expenses to my Brother and Sister, my Brother refused to pay. After months (Well over a year actually) of arguing, I eventually snapped, and started a small claims action to recover these expenses.

In his response to the claim he has stated that his solicitor has advised him that because the "Deed of Variation" did not contain a specific clause explicitly stating that I still intended to recover the testamentary expenses, he's within his rights to refuse to pay!

I'm sure this cannot me the case, as why would I approve a "Deed of Variation" which disadvantages myself. The "Deed of Variation" clearly performs only the act of splitting his inheritance equally between himself and his wife, and makes no reference to any other part of the Will being executed.

If he was right a "Deed of Variation" would need to be a whole new Will, not just a variation of part of the terms. Can anybody advise on if my interpretation is sound. I cannot believe that his view could be supported in Law, and that all the other terms of the Will (Including the testamentary expenses) remain valid.

FYI: My own solicitor at the time I was preparing this "Deed of Variation" checked the Deed, and did not make any such comments that I may be writing off the testamentary costs. I feel that if he's correct I have good cause to challenge my own solicitor's advice that the Deed was OK.

Many thanks,
D.

[Peridot]

Hi Donchick,
Just to clarify, did the brother and sister receive the residue of the estate or were they specific gift legacies such as sums of money, a property for example.

The wording of the Will is relevant as to where the testamentary expenses come from. Hopefully with a little more information we can point you in the right direction.

[Donchik]

Hello Peridot,
Sorry for delay in responding.

The will wording is as below:
"I give all my interest at the date of my death in [The property] (Out of which shall be paid my funeral and testamentary expenses my debts and all Inheritance Tax payable in respect of my estate) to the said [Sister] and [Brother] in equal shares or to the survivor of them provided that if either of them predeceases me leaving a child or children such child or children upon attaining the age of 21 years shall take the share to which his her or their parent would have been entitled and if more than on in equal shares"

Square brackets [] are my edits of personal data.

The Will then gives all chattels, and the residue of the estate to myself.

Other important paragraph would be:
"MY trustee shall have the power to invest trust money and transpose investments with the same unrestricted freedom in choice of investment as if absolute owner beneficially entitled"

I hope that this is sufficient information for a view.

Many thanks,
Donchik

[Peridot]

Hi again,

The issue you have is that the testator specified that the testamentary expenses were to be deducted from the proceeds of the property before distributing this to the brother and sister (which has been amended by the Deed to brother, his wife and sister). So it would not have been a case of re-writing the whole Will but ensuring everything stipulated in the legacy to brother and sister was covered, which included the testamentary expenses. If the Will just stipulated the property as a legacy to whoever, and was silent on the testamentary expenses then these would be deducted from any residue before final distributions were made to the residuary beneficiaries.

Is there a significant residue of the estate once the property and personal chattels have been taken out? I suspect not from your original post but just confirming. Did your brother and sister take the Deed to be checked before signing? What did you actually ask of the solicitor when you asked them to check the Deed?

I think you will need to get some face to face advice on this one to be certain but as I mention in the first paragraph there may be an issue due to the fact the testator was clear they wished the testamentary expenses to come from the property and not the residue, as would usually happen and if the Deed has varied the Will this clause in particular no longer does what the testator set out to achieve ie brother and sister paying the testamentary expenses from their legacy.

It appears that although you and probably the beneficiaries understood what the arrangement should be, your brother would seem to be taking advantage of the situation I'm afraid. Did anything get written down before you prepared the Deed. Are there any e-mails setting out the intentions and were the testamentary expenses mentioned? I am assuming the estate has been distributed already hence the small claim to recoup the testamentary expenses?

Any documentation of everyone's intentions may be helpful when you get some face to face advice.

[Donchik]

Hi again,

I find this kind of bizarre. An intention clearly stated in the I of V would I believe support my assertion that the testamentary expenses are not effected.

It reads:

"The testator's interest in the aforementioned [Property] at the date of death was 85% and accordingly the beneficiary's share of the aforementioned [Property] would be 42.5% from which the beneficiary's share of the aforementioned funeral and other expenses shall be deducted."

Then:

"The beneficiary has decided that his 42.5% of the aforementioned [Property] shall be divided between himself and his spouse the said [Sister-in-law] in the manner described"

It then details the 21.25% for each.

By my reading of the I of V it clearly demonstrates the intent to simply split the share between Husband and wife, not to evade responsibility for the testamentary expenses. I feel the "shall be deducted" is crucial.

Any views?

Thanks Donchik

[Peridot]

Hi again,
That would seem to be clear although not repeated in the 2nd clause you've posted above. Is this the wording of the Deed itself that was signed by all necessary individuals? Do you know if your brother sought legal advice?

Has the estate been distributed and how the IHT was paid?

As I mentioned, I think you need to take this to get some face to face advice to check your understanding and what the Courts would likely decide.