Glossary of terms

Inheritance Tax

A tax on the estate (the property, money and possessions) of someone who has died.

There’s normally no Inheritance Tax to pay if either:

• the value of your estate is below the £325,000 threshold
• you leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club

The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold.

Further information: https://www.gov.uk/inheritance-tax 

Deed of Variation

The document you need to change a person’s will after their death, provided any beneficiaries left worse off by the changes agree. You don’t need a formal document or deed - you can write a letter as long as it meets the legal requirements.

Further information: https://www.gov.uk/alter-a-will-after-a-death

Donor Advised Fund

A donor-advised fund (commonly called a DAF) is a charitable giving vehicle administered by a public charity created to manage charitable donations on behalf of organisations, families, or individuals. To participate in a donor-advised fund, a donating individual or organisation opens an account in the fund and deposits cash, securities, or other financial instruments. They surrender ownership of anything they put in the fund but retain advisory privileges over how their account is invested, and how it distributes money to charities.

Further information: https://en.wikipedia.org/wiki/Donor-advised_fund