Deed of Variation: What Is It?
A deed of variation is what you need if you want to make changes to a Will you are a beneficiary of after your loved one has died.
But unlike the name suggests, you don’t need a formal deed. All you have to do is write a letter, as long as it meets certain conditions.
There are different reasons you might want to do this.
We put this guide together to help you work out whether you need a deed of variation.
Deed of variation: What it does
A deed of variation is also sometimes known as an instrument of variation or a deed of family arrangement. It allows you to change what you’ve been left in someone’s Will after they have passed away.
This means that you can change your inheritance to include someone else in the Will. You may want to do this if you don’t need the full inheritance that has been left to you. If you want to change anyone else’s inheritance, they have to agree to it or you won’t be able to.
Your reasons for needing a deed of variation could include:
- Clearing up uncertainty around the Will
- Moving your loved one’s assets into a trust
- Providing for someone who wasn’t included in the Will but you think deserves an inheritance
- Reducing Inheritance or Capital Gains Tax
As an example, you may want to change a Will after your spouse’s death because they had not updated it to include your youngest child, who was born after they wrote their Will. The Will sets out inheritances for your oldest children, but you want all of your children to receive an equal amount.
You would have to get your older children’s agreement and then you could use a deed of variation to change the Will to give each of your children the same amount.
A deed of variation can also be used if no Will was left. When someone dies without a Will, they die intestate, which means the law sets out who will receive their assets.
If you are a beneficiary of someone’s death after they died intestate, you could use a deed of variation to change what you receive. This could be because you want to include an unmarried partner, who will not receive anything under the rules of intestacy, for example.
But just as you have to if a Will was left, you will need the agreement of any beneficiary whose inheritance you want to change.
What to do
You can make a variation before or after probate is granted. You’ll only face a deadline for a deed of variation if you’re making it to reduce Inheritance or Capital Gains Tax. In this case, it needs to be made within two years of your loved one’s death.
A deed of variation can reduce the tax you may need to pay after someone passes away. This could be done by agreeing to spread out inheritances more evenly between the beneficiaries or by giving your inheritance directly to your children. You could also change the Will so a part of the inheritance is donated to charity.
To ensure this is done legally, the Will executor must provide a copy of the variation to HMRC, so it can properly tax your loved one’s estate. The deed of variation – which can be a letter – will have to meet the conditions set out in HMRC’s form IOV2.
If the changes you make to the Will don’t affect the tax due, you don’t have to send HMRC a copy of the variation. You just need the beneficiaries affected by the changes to sign the document.
The Will executor then has to agree to the changes. At this point, the deed of variation becomes legally binding.
If you face any problems in going ahead with a deed of variation, such as other beneficiaries not agreeing to your changes, the right legal team could give you the guidance you need.
Talk to First4Lawyers to find out how we can help. Just give us a call, request a call back or make an enquiry online and we’ll get back to you.
