Deed of Variation Family Interest in Possession Trust

A Deed of Variation (DOV) Family Interest in Possession (FIIP) Trust is a legal tool that allows the beneficiaries of a deceased person's estate to redirect assets to a trust. This trust is created through a Deed of Variation, which amends the terms of the deceased person's will or intestacy after their death.

The DOV FIIP Trust is established when a beneficiary decides to redirect their inheritance to the trust instead of receiving it outright. The trust is set up as an interest in possession trust, which means that a named beneficiary has the right to receive income from the trust during their lifetime. After their death, the assets held in the trust are distributed to the remaining beneficiaries.

The use of a DOV FIIP Trust can provide a number of benefits, including tax planning advantages. For example, if the original will did not make full use of the deceased person's inheritance tax (IHT) nil rate band, the DOV FIIP Trust can be used to effectively "revive" the unused portion of the nil rate band, reducing the amount of IHT that would otherwise be payable. It can also be used to protect assets from future IHT liability and provide for the financial needs of family members.