Variation should be seen as a last resort – it increases the costs and administration of the estate and relies on all beneficiaries being willing and able to agree to any variation.
Where a charitable legacy exceeds 10 per cent of one component, the personal representatives should be alerted to the potential for an election to merge components in order to maximise the benefit of the 36 per cent rate.
Whether it is better from a tax perspective to gift in lifetime or on death will depend on the individual circumstances of each case. Lifetime gifts to charity will benefit from income tax relief. This may or may not be more tax-efficient than making the charitable gift by will for the remaining beneficiaries to qualify for the 36 per cent reduced rate.
As with a lot of financial planning, having the conversation earlier tends to keep more options open.
Victoria Harman is senior technical expert at Hargreaves Lansdown