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WILLs & Powers of Attorney
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PROBATE AND TRUST
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Apr. 12, 2018

It is often necessary when completing the administering of an estate to register a trust with HMRC, and; contrary to the title of this article, the deed of variation itself should not be reported as the settlor of the trust.

The position of the estate and the deed of variation

To better explain the various reporting requirements of HMRC through their Trust Registration Service (“TRS”) it is perhaps best to first identify the circumstances where this may be most applicable.

To be clear, registering a trust with HMRC itself is fairly simple in practice however our complication begins when a deed of variation has been executed in order to create (or vary) a trust within the will of a deceased individual.

Creating a trust by way of deed of variation

The first, and more simple, example will be in circumstances’ where the trust itself has been created by the deed of variation. A common scenario being when a spouse inherits from their deceased husband or wife and varies their inheritance to provide a sum in trust for their children.

The deed of variation does not provide transparency

In this example, despite the inheritance itself passing directly from the deceased to the trust, it has been confirmed that the Settlor reported to the TRS should be the spouse disinheriting herself.

An extended example (albeit still very common) of this would be in circumstances where the deceased provided a 50% share to each the surviving spouse and their children. In this situation, should either of the parties (children being the class of singular party in this example) were to use a deed of variation in order to provide their share to the other on the same trust terms then they should be reported as a joint Settlor with the deceased.

Further information concerning trust registration and the use of a deed of variation

If you require any further information then please do not hesitate to contact us directly.

Deed of variation example

Picture showing royal court of justice to represent deed of variation.