A deed of variation is a legal document which allows the beneficiary of an estate to change the distribution of the estate.
1. What is a post death variation (often referred to as a Deed of Variation)?
This is a document that can allow the beneficiary of an estate, who might not want, or require their full entitlement under a Will or under the Intestacy provisions, to redirect where the assets pass.
2. Who can make a Deed of Variation?
A variation can be made in respect of any gift in a Will, or under the Intestacy provisions, by any individual who benefits, providing that they are over 18 and have mental capacity.
3. Why would I want to consider making a variation?
There are many reasons why beneficiaries or trustees may want to consider rearranging the disposal of property comprised in an estate upon death, including;
- To re-direct benefits from one person to another: a common variation is where parents divert their inheritance to their children. This means that the parent does not need to survive 7 years from the date of the gift before it is outside their estate for the purpose of Inheritance Tax calculations
- To save tax: beneficiaries now consider taking advantage of the Transferrable Nil Rate band, and passing assets to a beneficiary who is exempt from Inheritance Tax
- To compromise disputes over devolution of estates & claims under the Inheritance (Provision for Family and Dependants) Act 1975: under this Act the law enables certain people to bring claims against the estate. These are generally people that the deceased should be expected to provide for, but didn’t. For instance, under current legislation, if a couple were living together but unmarried and one partner died without a Will, the other would not benefit under the law, and a Deed of Variation could enable provision to be made for them.
- To resolve a defect in a Will: sadly it can be the case that Wills, particularly "homemade" Wills, are defective in one way or another, creating a situation that it is clear the testator would not have wanted. A Deed of Variation can resolve this issue.