Deed of Variation – What is it and how can it benefit me?
If you are a Beneficiary of an Estate but do not wish to inherit either part or all of your Inheritance we can provide you with advice and assistance with making a Deed of Variation.
What is a Deed of Variation?
A Deed of Variation is a legal document made by a Beneficiary to vary their entitlement under the terms of a Will or under the intestacy rules. It can only be made after the death of the person who made the Will or the Intestate person.
If certain conditions are fulfilled, the variation will be treated as though the gift had been made by the deceased and not the Beneficiary. This can be beneficial for tax purposes depending on the circumstances of the Beneficiary or simply because the Beneficiary does not wish to benefit from the estate.
A Deed of Variation must be executed within 2 years of the date of death of the deceased, and it must contain references to certain Tax provisions if it is being made for that purpose.
Reasons why you might wish to vary your entitlement to an estate:
- If you do not need all or part of your inheritance and would like it to benefit someone else. This can be done by entitling the new Beneficiary to an outright gift of all or part of your share or placing it in Trust for them, perhaps because they are minors, in receipt of benefits or not yet financially mature.
- To provide some fairness where perhaps a family member was not included in the Will because they were born after the Will was made.
- You would like all or part of your inheritance to go to charity – this might be for Inheritance Tax purposes, e.g. to reduce the amount of Inheritance Tax payable on the deceased’s estate.
- A Variation can be used for Inheritance Tax planning purposes or to protect assets for future generations.
What a Deed of Variation can’t be used for:
- Consideration – you cannot make a Deed of Variation in exchange for some financial benefit.
- Alter the entitlement of another Beneficiary’s entitlement.
- To increase your share of the Estate.
- To change the Executors, Trustees or Guardians named in the Will.
It is important to seek professional advice on these complex matters to ensure the Deed is drafted correctly as there may otherwise be unforeseen legal and tax consequences which could be detrimental to your own estate.
We're here to support you:
If you would like further advice and assistance with making a Deed of Variation or have concerns regarding Inheritance Tax please contact our experienced team of lawyers on either 01305 250100 (Dorchester), 01308 422313 (Bridport) or 01305 771000 (Weymouth).
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