Deed of Variation on Joint Capital Redemption Bond
Sam_T
Member
Hi all
I am looking at a case for a widow, whose husband died just under 18 months ago. Their only assets where a jointly held house (not tenants in common) and a joint offshore capital redemption bond. Mr left a will, with Mrs as sole beneficiary.
Mrs now has a massive IHT issue. We are looking at converting some of the bond into a DGT which all works out fine. However, we are also looking at completing a deed of variation, and using Misters NRB to assign some of the bond segments to a grandchild.
Query is - is it possible for us to direct bond segments, that were jointly held, OR does the ownership automatically revert to the survivor on death? All a bit confusing as there is no life assured on capital redemption bonds and even the provider is not sure.
Hope that makes some sense?
Comments
Life assured issue has no relevance.
Joint owned bond passes to the survivor as essentially it is held on a joint tenant basis - exactly the same as the house.
Given that you can post-death alter property from joint tenant to tenant in common in order to implement a Deed of Variation I see no reason why you cannot do the same for segments of the bond. I presume that the grandchild is over 18?
There will be legal costs involved in all of this. Depending on amounts involved it may be worthwhile considering a straight gift from surviving spouse of some segments (so no legal costs for DofV and tenancy issue) but of course, you move from a gift on death to a 7 year PET which may not be appropriate.
Hi Richard
Thanks for your reply. I had thought the same as you, but the provider is suggesting that they may not be able to 'unwind' the joint bond. We have a solicitor on standby to assist, but if I get any clarity I will let you know what the result was.
Hi Sam,
There's nothing to unwind. It would seem that they do not comprehend what is involved.
All they have to do is implement the assignment of segments.
Ask them if they can actually assign segments 'normally' That's the first hurdle.
The second one is your Deed of Variation with the assignment which you then send to them. If they reject it then ask them to confirm their legal basis for doing so (as they are, in effect, providing you with legal advice if they reject it).
It is highly likely that you are discussing this with people who do not understand how these things can work.
Do not give up until you get a sensible answer - which will either be that their systems can't do it (& I do not think that is a valid reason for you not having a valid Deed of Assignment via the Variation in law in any case) or that they have definitive legal opinion (which they will share) which explains why it cannot be done.
Just remember, their sole role is one of administrator; it should not stop you doing what you need to do.
Morning - finally had an answer from the provider which was less than helpful:
"Whilst it appears that a joint tenancy can be severed by a deed of variation, I think in practice it would be very difficult with a bond. This is certainly not something we have done before.
As the policy is segmented, I can’t see a way in which you could retrospectively review the policy and divide the segments.
In addition, I think ascertaining a value for the transfer would also prove problematic."
So, as you anticipated they just don't know how to action it. We shall be going back to them to challenge the legal basis...
Hi Sam, Give me a call; I have an idea for you - easier to chat through, if you want. 01633 749964