What Is A Deed of Variation to a Will?

When someone dies, their estate is distributed in accordance with the terms of their Will, or if they have not made a Will, under the Rules of Intestacy. However, there may be certain circumstances where the beneficiaries of the estate may wish to vary how the estate is meant to be distributed.  

These could be for a number of reasons including:  

1. To make provision for someone left out of the Will. 

2. To balance distribution between beneficiaries. 

3. To make matters simpler for the beneficiaries. 

4. To reduce Inheritance Tax liability. 

In these cases, the beneficiaries may wish to utilise a Deed of Variation, which is a legal document that is used to vary the administration of an estate from the terms of a Will or the Rules of Intestacy.  

Practicalities:  

When determining if a Deed of Variation is the right course of action, there are multiple practical elements that you need to consider:  

• All the beneficiaries whose inheritance would be affected by the Deed of Variation must agree to it and consent to the changes. So, if one of the affected beneficiaries does not agree to the variation then it cannot go ahead. 

• Whilst the Deed of Variation can be signed before or after a Grant of Representation is obtained, you cannot formally vary any part of the inheritance if it has been given away. 

• You cannot vary the appointment of executors or guardians appointed in a Will; the Deed of Variation can only vary the distribution of an estate.  

Legal Implications:  

Given that a Deed of Variation is a legal document, there are legal implications that must be adhered to. Below is a non-exhaustive list of some of the legal considerations to keep in mind:  

• The Deed of Variation can only be made within two years of the deceased’s death. 

• Only beneficiaries who are over the age of 18 and have full mental capacity can sign the Deed of Variation. If a beneficiary is under the age of 18 or lacks mental capacity, then the Court must consent to the variation. 

• The Deed of Variation must be made in writing.  

• The beneficiary cannot be given any financial incentive for them to agree to the variation.  

• Once the Deed of Variation has been signed and the disposition of the estate altered, it cannot be varied again. There will not be a second chance to change the distribution.  

Situations where it might be needed:  

To make provision for someone left out of the Will: 

If the deceased wanted someone to be provided for in their Will, such as a friend or family member, and never got round to putting this provision in their Will, or mistakenly thought the Will provided for this person, then a Deed of Variation could be used to make sure these wishes are followed.  

To balance distributions between beneficiaries; 

If one beneficiary was set to receive significantly more than other beneficiaries (for instance one child or grandchild inheriting more than their siblings) then a Deed of Variation could allow for all the beneficiaries to inherit an equal amount. This may stop disputes over the value of the inheritance received by beneficiaries.  

To make matters simpler for the beneficiaries: 

If a beneficiary intended to gift their inheritance to someone else straight away, then they may wish to use a Deed of Variation so that that the ultimate beneficiary inherits the assets directly. If assets are gifted within 7 years of your death, then this can reduce the Nil-Rate Band Allowance available for your estate, and could potentially mean a 40% Inheritance Tax charge would apply to the gift itself.  A Deed of Variation may therefore be useful to avoid any of these issues.  

To reduce Inheritance Tax Liability: 

A Deed of Variation can make use of any available Inheritance Tax reliefs that have not been utilised. For instance, any gifts between spouses or civil partners are exempt from Inheritance Tax. So, a Deed of Variation could be used if an estate had a significant Inheritance Tax liability and wanted to reduce this by directing some, or all of the assets to the spouse or civil partner of the deceased.