When a loved one passes away, their Will (or the intestacy rules) may dictate how assets are distributed. But what if the original arrangement no longer reflects the needs or wishes of the beneficiaries? That’s where a Deed of Variation becomes a powerful tool. It enables adult beneficiaries to redirect their inheritance—potentially altering tax outcomes, providing for others, or resolving family concerns.
What is a Deed of Variation?
A Deed of Variation is a legal document allowing someone who inherits (an is an adult) under a Will or intestacy to change how their share is distributed. This must be agreed upon within two years of the date of death and can affect:
- The allocation of specific assets
- The inclusion of new beneficiaries
- The redirection of inheritance to trusts or charities
Why Use a Deed of Variation?
There are several strategic and compassionate reasons to use a Deed of Variation:
- Tax efficiency: Beneficiaries may redirect assets to reduce inheritance tax liability.
- Family fairness: Adjusting distributions to reflect current relationships, dependents, or financial need.
- Estate planning alignment: Integrating the inheritance into existing family trusts or structures.
- Charitable giving: Including charitable gifts for legacy or tax benefit purposes.
Practical Example
A client inherits £200,000 from their late mother. They already have significant assets and wish to reduce their estate’s future tax exposure. Through a Deed of Variation, they redirect £100,000 to a discretionary trust benefiting their children—removing it from their estate and achieving future tax mitigation.
Timing and Conditions
To be valid, a Deed of Variation must:
- Be completed within two years of the deceased’s death.
- Be signed by all affected parties.
- Clearly state if the variation should be treated for inheritance tax or capital gains tax purposes.
Solicitor input is vital to ensure the variation aligns with legal standards and is registered appropriately with HMRC when necessary.
Who Might Benefit Most?
- High-net-worth individuals looking to restructure their tax planning
- Families seeking equitable asset redistribution
- Executors facing contested Wills or potential claims
- Beneficiaries balancing personal finances with broader family obligations
Final Thoughts: Flexibility with Foresight
Estate planning doesn’t end with a death—it can evolve through tools like Deeds of Variation. They offer flexibility, compassion, and strategic insight, ensuring that an inheritance serves not just the immediate beneficiary but the wider legacy they carry.
For tailored advice or to discuss whether a Deed of Variation could help your circumstances, our team of estate planning specialists is here to guide you.
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Amanda Voakes is a Partner in our expert Wills and Probate team, advising on Inheritance Tax planning, Wills, administration of estates, grants of Probate, grants of Letters of Administration, Powers of Attorney, administration of affairs, and residential care fee planning/protection of assets.
To discuss how we can help you, please contact Amanda or another member of the team on 0808 258 0461 or via our online enquiry form.
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