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Deeds of Variation
If you need to vary the terms of a will after a loved one has died, you may be able to do so using a deed of variation. The experienced and approachable team at JMW is here to provide all of the assistance and advice you need in order to make this possible. As experts in this field, we can ensure that a seemingly complex process becomes as stress-free as possible.
Not a lot of people know that it is possible to vary the terms of a will after someone has died. However, it is possible - and any alterations that need to be made are carried out using a deed of variation.
There are good reasons why a will may need to be altered after death, for example:
- To clarify an area of uncertainty in a will
- To provide for someone who was left out of the will or under the intestacy where there was no will
- To make the will or intestacy more tax efficient in order to reduce the amount of Inheritance Tax or Capital Gains Tax that is payable, such as by putting some of the assets into a trust
It may be the case that the family of a loved one may all be in agreement about what they intended to do with their estate, but the will is insufficiently clear. Alternatively, a beneficiary may decide that they want their inherited share to pass directly to their children. A deed of variation can deal with both situations, and can reduce the Inheritance Tax that could be payable.
The deed of variation changes the terms of a will for tax purposes and any gifts made in this part of the process are treated as if they were made by the deceased.
Even if the deceased did not leave a will, a deed of variation can also be used to redirect an asset that a beneficiary has received under the intestacy rules, perhaps to reduce the tax liability of the estate, for example:
- To benefit from the lower rate of inheritance tax by making an appropriate gift to charity
- Redirecting the asset to another beneficiary to make the best use of available exemptions
Why Are Deeds of Variation Used?
A deed of variation can be used for several purposes, which include reducing Inheritance Tax, but on occasion it can increase Inheritance Tax or be tax neutral. For example:
- Where everyone thought the effect of a will was X, but the will says something different. If everyone is in agreement, then the will can be altered to what everyone thought it should be
- The deceased says on their deathbed that they would like X to get a gift under their will, but they don't get the chance to sign the will
- There is a trust set up within the will, but the costs of running a trust are out of proportion with the funds that would be in the trust. If all the beneficiaries agree, the will can be altered and the trust wound up
- If the law has changed since the will was put in place, such that the effect of the will is no longer what the deceased would have wanted
What Are the Rules Regarding Deeds of Variation?
The rules surrounding deeds of variation are contained within section 142 of the Inheritance Act 1984. They allow someone who is inheriting to vary their inheritance (so long as it is done in the correct way) for it to be treated for Inheritance Tax and Capital Gains Tax purposes. Essentially, the deed is as if the amendment was included in the will of a deceased.
Who Can Use a Deed of Variation?
There are a number of rules that must be met in order to use a deed of variation:
- Any deed must be made within two years of the death of the person leaving the estate
- The variations must be agreed by any beneficiary who is left worse off by them
- Those beneficiaries cannot be paid or given something in exchange for their agreement
Our highly experienced and friendly team has the know-how to make sure all processes involving a deed of variation run as smoothly as possible. We understand that any dealings with wills can be emotional, which is why we are here to provide you with the professional and confident service you require at what can be a very difficult time.
If you have recently inherited the will of a loved one and need advice on whether a deed of variation would be suitable, we're the law firm to provide the guidance you need.