A Will is a very personal document, drawn up by the granter during his or her life. Its purpose is to direct the distribution of the granter’s estate after his or her death. Clearly, that means it is not possible to change a Will after the granter has died.
 

However, whilst you cannot change the Will, if you are a beneficiary, you can redirect the distribution of the estate. To do this, you need to create a Deed of Variation.
 

What is a Deed of Variation?

A Deed of Variation is a document, usually prepared by your solicitor, that instructs the redistribution of an estate. Importantly, you can use a Deed of Variation whether or not the deceased made a Will. A Deed of Variation is as effective in an intestate estate (where there is no Will) as in a testate estate (where there is a Will).
 

You might use a Deed of Variation to adjust the shares amongst the beneficiaries or to include new beneficiaries who may have been omitted from the Will.

When a Deed of Variation is created, it must contain certain elements in order to be valid. These include:
 

• clearly identifying the parts of the estate to which it relates;
• identifying who is to benefit;
• being created within two years of the death of the deceased;
• a statement that it is effective from the date or death;
• being signed by all beneficiaries involved in the redistribution;
• a statement that the variation is to be effective for Inheritance Tax (IHT) and Capital Gains Tax (CGT) purposes.

If a Deed of Variation does not contain these essential elements, it will not be valid.
 

What reasons might you have for using a Deed of Variation?

There are any number of reasons why you might consider using a Deed of Variation. Because a Deed of Variation alters the distribution of the estate, there are endless permutations based on what it being redistributed and to whom.

Here are some examples of the purposes to which a Deed of Variation may be put.
 

To deal with Inheritance Tax (IHT) issues

A Deed of Variation can be used to help mitigate the impact of Inheritance Tax (IHT). Any estate over £325,000 will potentially attract IHT. There are, as always with taxation, exemptions from this threshold. For instance, if the entire estate were to transfer to the surviving spouse or civil partner, no IHT would be payable.
 

However, if the estate is above the threshold and if IHT is payable, the beneficiaries may decide to make a donation to charity from the estate. If that happens, the amount of the charitable donation would be exempt from IHT and would have the effect of reducing the value of the estate subject to IHT. IHT is payable at a rate of 40% on the balance of estate over £325,000. Indeed, if you rearrange the distribution of the estate so that 10% or more is donated to charity, the IHT rate will reduce from 40% to 36%. This can lead to a very significant saving in very large estates!
 

Equal and unequal shares

There may be instances where the beneficiaries may believe that the estate should be shared equally when the Will provided otherwise or where the will provided for equal distribution, to make the distribution unequal.

There may be situations where some members of the family who inherit the estate have more than sufficient wealth to sustain them whereas others in the family may not be as well off. In such circumstances, those better off in the family may decide to reduce their share of the estate in favour of their relative who is not as well off.
 

Alternatively, if the deceased’s Will provided for an uneven distribution of the estate, the beneficiaries might decide to change that arrangement to ensure all beneficiaries share in the estate equally.
 

To include someone in the estate not mentioned in the Will

In some circumstances, especially with blended families, there may be circumstances where, for instance, a stepchild has been omitted from the estate. The beneficiaries of the estate may believe this to be unfair and can enter into a Deed of Variation to redistribute the estate to include the stepchild.
 

There are family dynamics in every family and it is always difficult to second guess what might happen after someone dies, whether they have made a Will or not!
 

If you are a beneficiary in a Will and would like to discuss redistribution of the estate, please contact us.