Deeds of Variation
Read time: 4 minsA Deed of Variation allows beneficiaries to alter how an estate is distributed, provided all affected parties agree, and no compensation is exchanged. A Deed of Variation must be executed within two years of death, and it offers a practical solution for addressing changing circumstances, such as improving tax efficiency or rebalancing inheritances among beneficiaries. While this mechanism can help minimise Inheritance Tax and Capital Gains Tax or correct perceived financial imbalances, it should not be relied upon as a substitute for effective estate planning.
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In most cases, a loved one’s wishes will be executed, and their estate distributed, according to their Will. However, in some circumstances, these can be amended using a Deed of Variation. One reason for using a Deed of Variation is to pass Inheritance Tax in the most efficient way and minimise the impact of Capital Gains Tax. A Deed of Variation can also be used to balance disparities in the finances of beneficiaries (i.e., to grant a higher proportion of entitlement to the sibling with the least wealth). It’s important to note that, while a Deed of Variation does offer a legitimate way to change a Will after death, it should not be relied upon as part of an individual’s estate planning. Moreover, a Deed of variation can only be used if everyone adversely affected agrees and there is no reciprocation; that is, no one is compensated for what they give up.
If you are the beneficiary of an estate and would like to learn more about Deeds of Variation, book a consultation with one of our Probate solicitors. They offer expert advice tailored to your circumstances and help you plan your next steps.
Frequently Asked Questions
What is a Deed of Variation?
A Deed of Variation is a legal document that allows beneficiaries to change how a deceased person’s estate is distributed after their death, even if a valid Will exists.
Can a Deed of Variation be made after probate has been granted?
Yes, a Deed of Variation can be executed after probate, provided it is completed within two years of the date of death.
Who needs to agree to a Deed of Variation?
All beneficiaries who are affected by the proposed changes must give their full consent for the variation to be valid.
Why would someone use a Deed of Variation?
Common reasons include reducing Inheritance Tax or Capital Gains Tax, supporting a beneficiary in greater financial need, or redirecting assets to different beneficiaries.
Is a Deed of Variation legally binding?
Yes, once properly drafted and signed by all relevant parties, it becomes legally binding.
Examples
Example A
Tax efficiency planning
Sarah is due to inherit £500,000 from her late father’s estate. She is already financially secure and is concerned about future Inheritance Tax liabilities on her own estate. She uses a Deed of Variation to redirect part of her inheritance to her children, helping reduce the overall tax burden across generations.
Example B
Correcting an outdated Will
A Will was written many years ago and no longer reflects current family circumstances (e.g., estranged relationships or new dependents). The beneficiaries agree to redistribute the estate using a Deed of Variation to better reflect the deceased’s likely current wishes.
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