Deed of Variation Explained

Deeds of variation are important documents for those who are beneficiaries of a will to understand. They can have far reaching implications for the execution of the will, and beneficiaries may wish to produce one themselves. Here’s our guide to these essential documents:

What is a deed of variation?

A deed of variation is a legal document that allows for changes to be made to a will by a beneficiary of the will, or to change the way intestacy rules are applied if there is no will to follow.

The deed of variation can be used to alter the distribution of assets among existing beneficiaries or to add new ones, as well as make other changes.

Why use it?

Common reasons to request a deed of variation include tax efficiency, provisions not being made for people born after the will was written or partners not covered under intestacy rules, and beneficiaries wishing to ‘even out’ an estate’s distribution amongst themselves.

Beneficiaries can make changes to their own share of the estate, including redirecting their inheritance to others, setting up a trust or gifting money to a charity. Any change to the overall distribution must be agreed by all beneficiaries affected, and expert legal advice should be sought to ensure the changes are properly described and that the document is legally binding.

What are the tax implications?

The tax advantages of deeds of variation primarily revolve around inheritance and capital gains tax. Deeds of variation can be used to adjust the distribution of an estate to take advantage of all available tax reliefs, as well as changing some of the will’s declarations so that HMRC will treat some of the estate as a gift rather than inheritance, beneficiaries can reduce their exposure to these taxes. However, it is absolutely vital to get expert legal advice when making these types of deeds of variation, as doing it incorrectly can result in harsh penalties or discord between beneficiaries.

How much does a deed of variation cost?

While there is no fixed cost as each case is unique, deeds of variation can take some time to prepare, especially if there are any disputes. Contact your solicitor for more information on what their deed of variation cost may be.

DFA Law can help beneficiaries of wills produce robust and legally sound deeds of variations that meet their estate management needs. Give us a call on 01604 609560 or email on info@dfalaw.co.uk.