Deeds of Variation – Changing a Will after the Date of Death

What is a Deed of Variation?

A Deed of Variation lets you change who inherits from a UK Will (or intestate estate) after the date of death, providing all beneficiaries agree to the same.  It is one of the most useful and least understood tools in UK estate planning. 

Common uses can include redirecting an inheritance to a child or charity for inheritance tax efficiency, supporting a less well off relative or correcting an unintended consequence of a older Will. 

There are specific rules that need to be followed: 

• All beneficiaries whose entitlement will be reduced must agree in writing to the variation;
• The variation must be made within two years of death;
• The variation is treated for tax purposes as if the testator had made the gift directly 
• Deeds of variation cannot create a gift to anyone who is not already a beneficiary of the Will or intestacy unless someone who is a beneficiary chooses to redirect their share to that person  

What a Deed of Variation actually does

When someone passes away the Will (or intestacy rules) determines who inherits.  Once those entitlements are fixed, the beneficiaries themselves can choose to redirect their inheritance and a deed of variation is the formal document that does this. 

For example:  your mother dies and leaves you £250,000 from a £600,000 estate.  You personally do not need the money, but your sister whom is also a beneficiary of the estate is struggling financially.  You could sign a deed of variation directing a certain amount of your inheritance to your sister.  For tax purposes the variation is treated as if your mother had left her the certain amount of money directly, even though she had not. 

What can you do with a Deed of Variation?

A Deed of Variation can do almost anything that could have been done in the original Will as follows: 

• Redirect a specific gift 
• Redirect a share of the residue 
• Add a beneficiary 
• Create a trust 
• Vary intestacy 
• Provide for someone unintentionally left out
• Disclaim an inheritance 
• Adjust to claim reliefs 

Common Reasons to prepare a Deed of Variation

Reduce Inheritance Tax – redirecting some of the inheritance to a charity or redirecting from a beneficiary who would themselves face inheritance tax on death by passing to a grandchild. 

To support a less well-off family member – a beneficiary whom does not need their full inheritance can redirect some of their inheritance to a family member who does.

To correct a out of date Will – the current Will may not reflect the current family situation, there may for example be new grandchildren, divorce or change of relationship.  Beneficiaries can adjust the distribution to match the new family situation which in most cases would be what the deceased would have wanted. 

If you are considering preparing a Will, updating your Will or varying an estate our Private Client Department would he happy to assist with this.