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Deed of Variation: How To Change a Will After Death

A Deed of Variation, also known as a Deed of Family Arrangement, is a legal tool that lets people change how a deceased’s estate is shared. It’s especially useful for property and wills. This means if someone has passed away, their family can decide to share things differently than what was originally written in the will.

This can help make sure the estate is given out in a way that’s better for everyone involved; for example, by reducing taxes or making sure the property goes to someone who needs it. It’s a helpful way to adjust plans even after someone has passed away, making sure their wishes and the family’s needs are met.

 

What is a Deed of Variation?

A Deed of Variation is a legal document that allows people to change a will after death, dividing up someone’s things. Imagine if someone leaves behind a will, but their family thinks it would be better to share things differently. This deed provides the power to change the will, as long as everyone agrees.

The main people involved in this process are the beneficiaries, who are meant to receive something from the will. There’s also the executor, who is in charge of making sure the will’s instructions are followed. Sometimes, legal professionals, like lawyers, help to make sure everything is done right and legally.

This deed is important because it can help families avoid paying more taxes than necessary. It can also make sure that the wishes of the deceased person are followed in a way that fits the current situation of the family better. However, it’s a big decision with legal effects, so it’s usually a good idea to get advice before making any changes to the deed from a professional. This way, families can make sure they’re distributing the estate to benefit everyone involved.

Legally, for a Deed of Variation to be effective, it must be completed within two years of the deceased’s death and signed by all beneficiaries who would be affected by the changes. Its significance lies in its ability to allow posthumous adjustments to the distribution of an estate, offering a level of flexibility that can be crucial in addressing unforeseen circumstances or changes in family dynamics after the will is made. Importantly, when executed correctly, a Deed of Variation is recognised by HM Revenue and Customs (HMRC) in the UK, meaning it can lead to substantial tax reliefs without the need for the estate to undergo a complete re-assessment.

 

Deed of Variation in Property

A Deed of Variation is a useful legal tool used when dealing with properties after a person’s death. It allows the family to change who gets what property according to the deceased person’s will. Sometimes, after a person has died, the family might realise that it makes more sense for a different family member to inherit a property. Maybe it’s because they need a home or it helps with tax planning.

For example, if a house was supposed to go to one sibling, but it’s more practical for it to go to another, a Deed of Variation can make changes to the inheritance. It can also be used to reduce your inheritance tax liabilities by transferring some of your entitlement to a beneficiary in a lower tax bracket or to a charity. By changing who gets the property, the family can pay less in inheritance taxes (IHT), which can save a lot of money.

This tool is very flexible. It lets families make decisions that fit their current needs and wishes, even if those are different from what was originally written in the will. It’s all about making sure the property goes to the right person at the right time, in a way that’s best for everyone involved.

 

Deed of Variation in Wills

A Deed of Variation is a powerful tool when it comes to wills and how estates are divided. Simply put, it allows the family of someone who has passed away to change the terms on who gets what. This can be useful for many different reasons.

Firstly, it helps make sure that the estate is shared in a way that fits the family’s current needs or wishes better. For example, if the original will gives a property to someone who already has a home, the family might agree it makes more sense to pass it to another family member who needs it.

Secondly, it can also help with taxes. Sometimes, changing how things are given out can lower the amount of tax the estate, or the people inheriting, have to pay.

Lastly, it’s a way to fix any issues or oversights in the original will without having to go through a long legal process.

In short, a Deed of Variation gives families the flexibility to work out the best way to structure the estate, considering their current situation and needs.

 

What You Need To Consider When Making a Deed of Variation

Creating a Deed of Variation involves a few important steps and legal considerations to ensure it is valid and achieves the intended outcomes. Here’s a simplified step-by-step guide to help you understand the process:

1. Gather Information

First, collect all necessary information about the estate, including the will and details of the assets involved. You’ll need to know exactly what you’re planning to vary and how.

2. Agreement Among Beneficiaries

All beneficiaries affected by the proposed changes must agree to the Deed of Variation. This is crucial because it ensures that everyone’s interests are considered and that the variation is made consensually.

3. Seek Legal Advice

Consulting with a solicitor who specialises in wills and estates is highly recommended. They can provide advice on the implications of the changes, including tax reasons, and help draft the deed to ensure it’s legally sound.

4. Draft the Deed

The deed must clearly outline the changes being made to the distribution of the estate. It should specify which parts of the will are being varied and how. The document should be precise to avoid any ambiguity.

5. Signatures

The Deed of Variation must be signed by all parties involved in the changes. This typically includes the beneficiaries who are giving up their rights to certain assets and those who will be receiving them.

6. Witnesses

The signatures on the deed must be witnessed to be legally binding. Witnesses should be independent individuals who are not beneficiaries of the deed.

7. Notify Relevant Parties

Once completed, it’s important to notify any relevant parties of the changes. This includes executors of the will and, potentially, tax authorities, especially if the variation affects the estate’s tax liabilities.

Legal Requirements and Considerations:

  • Time Limit: A Deed of Variation must be made within two years of the deceased’s death to be effective for tax purposes.

     

  • Tax Implications: The variation can have significant implications for inheritance tax and capital gains tax. It’s possible to redirect their entitlement in a way that minimises inheritance tax burden on the estate or the beneficiaries.

     

  • Formality: The deed must comply with legal requirements, including being in writing and signed by all affected parties. Failure to meet these requirements can render the deed invalid.

     

Creating a Deed of Variation is a sensitive process that requires careful consideration and legal expertise. It offers a flexible way to ensure that an estate is distributed in a manner that reflects the current wishes and needs of the family, while also potentially providing tax benefits.

 

Benefits and Risks of Using Deeds of Variation

Using Deeds of Variation in legal agreements comes with its set of benefits and risks that parties should carefully consider.

Benefits:

  • Flexibility: Deeds of Variation can be used to change the distribution of an estate to better reflect the current wishes of the beneficiaries or to address changes in circumstances that have occurred since the will was written.

     

  • Tax Advantages: They can be used to optimise the estate for tax purposes, reducing inheritance tax or capital gains tax liabilities for the beneficiaries.

     

  • Family Harmony: By allowing adjustments to the will, disputes or disagreements among family members regarding the distribution of the estate can be resolved amicably.

     

Risks:

  • Irrevocability: Once put in place and executed, a Deed of Variation is generally irrevocable, meaning the decisions made cannot easily be undone. This requires all parties to be certain of their decision.

     

  • Complexity and Costs: The process can be complex, requiring legal advice and incurring additional costs. Misunderstanding the legal and tax implications can lead to unintended consequences.

     

  • Potential for Abuse: There’s a risk that beneficiaries might be pressured into agreeing to changes that are not in their best interest, especially if they do not fully understand the implications.

     

While Deeds of Variation provide a valuable tool for estate planning, offering flexibility and potential tax benefits, they must be approached with caution, understanding and, ideally, professional guidance to ensure that the interests of all parties are protected and the intended outcomes are achieved.

How Can Sandstone Legal Help

Sandstone Legal provides expert legal advice and support tailored to simple or complex circumstances surrounding deeds of variation. Our team of experienced solicitors understands the complexities involved in altering the distribution of an estate. We offer personalised advice to ensure that any changes made through a Deed of Variation are legally sound, tax efficient, and in line with the wishes of all parties involved.

If you’re considering the implications of a Deed of Variation or have questions about how it could benefit your specific situation, we invite you to reach out. Our experts are here to provide the comprehensive support and guidance you need to make informed decisions. Call us today on 0161 470 1511 if you want to discuss more about the Deed of Variation and discover how we can assist you in achieving your estate planning goals with confidence and peace of mind.

FAQs

Yes, a beneficiary can be changed after death, but it depends on various factors, including the agreement of all beneficiaries affected by the change. A Deed of Variation can be used to redistribute the estate differently from what was outlined in the will or under the rules of intestacy, provided all parties agree.

Through a Deed of Variation, you can make several types of alterations, including changing the beneficiaries of the estate, altering the shares of the estate each beneficiary receives, redirecting assets to a trust, or skipping generations. The changes must be agreed upon by all affected parties and made within two years from the date of death.

While it’s not legally mandatory to use solicitors to finalise a Deed of Variation, it is highly recommended. Solicitors can ensure that the deed is correctly drafted to reflect the parties’ intentions, comply with legal requirements, and consider all tax implications.

No, a Deed of Variation cannot be used to change executors. Executors are appointed to administer the estate as per the will or, if there’s no will, according to the intestacy rules. Their role is separate from the distribution of the estate, which is what a Deed of Variation can alter.

Yes, there are alternatives to a Deed of Variation, such as beneficiaries choosing to renounce their inheritance entirely or the use of family arrangements to agree informally on a different distribution of the estate. However, these alternatives may not have the same legal or tax implications as a formal Deed of Variation.

Once a Deed of Variation is signed and witnessed, it is generally considered final and legally binding, making it difficult to cancel or withdraw. Therefore, it’s crucial to be certain of the decision and to seek legal advice before proceeding with a Deed of Variation.

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