Making Changes To A Will / Intestacy After Death

In some instances it may be beneficial or desirable for entitlements under a will, or in respect of an intestacy, to be varied, after a person has passed away.

These are what is known as post-death variations.

There are many reasons why you might choose to vary how an estate should pass, for example, to mitigate the tax consequences of inheriting, to make a distribution more equitable, or to give effect to the deceased’s wishes.

To be fully effective for tax purposes the instrument to vary the will / intestacy must be entered into within two years of the date of passing of the deceased. If this is done, and the relevant elections are made, the new provisions will essentially be ‘written back’ for both inheritance tax and capital gains tax purposes. This essentially means that the gifts will take effect as if they were in the original will.

If there are any adverse tax consequences of the variation, then the personal representatives of the deceased should also be a party to the document, as they will be responsible for ensuring that any applicable tax is paid.

There are two main methods of varying an estate; Deeds of Variation and Disclaimers.

Deeds of Variation

A Deed of Variation is used to essentially rewrite the distribution of an estate and direct where an entitlement should be diverted.

It can be used to name a new beneficiary entirely or to vary the proportions in which existing beneficiaries should inherit.

The benefit of utilising a Deed of Variation is that you have control over where the assets in question will then pass.

In order to enter into a Deed of Variation, everyone who is adversely affected by the Deed must agree. There must also be no compensation paid in respect of anyone relinquishing their entitlement, and the party giving up some or all of their entitlement must also not have enjoyed any benefit from the assets in question before doing so.

Disclaimers

Disclaimers are often used instead where it is not possible or practical to obtain the consent of all parties who may be affected, i.e. if some parties are under the age of 18 or do not have capacity to consent.

Essentially, under a Disclaimer, the beneficiary who is entitled is saying that they do not wish to benefit, and the gift will then pass to the next person who is entitled under the terms of the will / the rules of intestacy.

Using a Disclaimer you cannot specify who you would wish to benefit instead.

As with a Deed of Variation, no compensation should be paid in respect of anyone relinquishing their entitlement, and the party giving up some or all of their entitlement must also not have enjoyed any benefit from the assets in question before doing so.

It is strongly recommended that you take legal advice before entering into any such post-death variation, because, as well as the potential taxation consequences (both positive and negative) of doing so, it is imperative that the document is right first time, as it is not possible to vary the same entitlement more than once.