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A Deed of Variation or Family Arrangement enables Beneficiaries of a deceased’s estate to alter the distribution of that estate and even to distribute the estate to a different Beneficiary altogether. It is sometimes known as a deed of assignment, or deed of surrender or release and can be drawn up to two years after the date of death. In order to establish a Deed of Variation ALL the beneficiaries of the Will must be in agreement. When children are involved the matter is further complicated as they cannot themselves consent to changes. An application must be made to the courts for consent to be obtained on their behalf.

Why Use a Deed of Variation?

  • Reduce Tax Liability

A Deed of Variation can be used by the Beneficiaries of a deceased’s estate to rewrite the distribution of the estate so that is passes on in the most Inheritance Tax efficient way and to minimise post death Capital Gains Tax (CGT) liability.

Making a Discretionary Trust and skipping a generation, thus preventing the swelling of estates of wealthy parents which will be taxable, are both ways in which Deeds of Variations can be used to alter the will of a deceased to reduce Inheritance Tax liability.

  • Balance the differences between beneficiaries

A Deed of Variation can also be used to balance the differences in the finances of the Beneficiaries (ie grant a higher proportion of entitlement to a poor sibling leaving the wealthier sibling with less).

Can a Deed of Variation be Relied on?

A Deed of Variation should not be relied upon as part of an individual’s estate planning. It may be that the effectiveness is reduced by the Government in the future. At present, however, they do offer an effective way of changing a will after death.

When Can a Deed of Variation be Used?

A Deed of Variation can only be used if:

  • everyone adversely affected agrees
  • there is no reciprocation – no one is compensated for what they give up
  • none of the assets are affected by a Gift With Reservation
  • if the rights of children or unborn children are affected, Court approval will be needed

Contact us or call our call our mobile friendly number on 033 33 22 1000 or 0800 987 8156 to book an initial consultation with a Solicitor.

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