Saving money with a deed of variation

Written byLegacy Insights

June 22, 2021

After someone’s death, their beneficiaries have the option to change the way in which the estate is distributed. This is done by executing a Deed of Variation.

When somebody dies, their affairs are wound up by their personal representative, either an executor, if they left a Will, or an administrator, if they died without making a Will.

The personal representative is responsible for collecting in and valuing the assets in the estate, settling any debts, to include Inheritance Tax, and distributing the estate.

In certain circumstances, the beneficiaries may want to alter the amount each person receives or include someone else.

Writing a valid will is vital

Why would the terms of a Will be altered?

There are several reasons why beneficiaries might want to change a Will, as follows:

  • If the beneficiaries feel that someone has been left out, they may choose to include that person.
  • They may feel that a different distribution, for example equal shares, is fairer.
  • By changing the terms of the Will, it might be possible to legitimately reduce the amount of Inheritance Tax payable. For example, by leaving 10 per cent to a charity, the rate of Inheritance Tax will drop from 40 per cent to 36 per cent.
  • The Will may be ambiguous and a Deed of Variation could set out the terms of any agreed interpretation.
  • If the deceased did not leave a Will, then their estate will pass under the Rules of Intestacy to close relatives in a strictly prescribed order. Those entitled to inherit under the Rules could choose for the estate to be distributed differently, for example by including step-children or cohabitees, who receive nothing under the Rules of Intestacy.

Drawing up a Deed of Variation

It is important that the Deed of Variation is clear and properly executed to avoid difficulties in the future, should someone change their mind.

The document should be in writing and must be made within two years of the date of death.

All of the original beneficiaries who would be less well-off under the terms of any alterations need to agree to the variation and sign the deed.

The deed should detail exactly what parts of the distribution of the estate are being altered and who is to benefit now.


Other considerations when making a Deed of Variation


If the Deed of Variation will alter the amount of Inheritance Tax payable on the estate, then a copy must be sent to HM Revenue & Customs.

In the event that anyone aged under 18 will lose out when a Will is altered, the approval of the Court will be needed. It is not sufficient that parents consent to the variation.

The only changes that can be made in the Deed of Variation are changes to the disposition of the estate. Executors or guardians cannot be appointed, although if a trust is set up, then trustees can be appointed to administer it.

Considering a Deed of Variation?

To learn more, book a free call with one of our probate experts to take you through the benefits and risks.

From our Cambridge office, in your own home or online, we’re ready to help you in the way that is best for you.

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