What is a Deed of Variation?
A deed of variation, or sometimes referred to as a deed of family arrangements, is used when you need to make changes to a person’s Will after they have died. In some cases its important for a beneficiary to want to vary their inheritance with another person. This can be useful for several other reasons some of which include:
- Save money on capital gains or inheritance tax
- To insure the inheritance is equally distributed between beneficiaries including relatives not included or at a loss
- Moving the recently deceased assets into a trust
- To include someone else in the Will such as a child or grandchild who was not included in the Will.
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What if the deceased left behind no Will?
If no Will was drafted before the death of the deceased then rules of intestacy will apply to the estate in question, this is known as dying “intestate”. If this is the case, a deed of variation can still be used to alter the distribution of the estate and is known as a deed of variation of intestacy. The estate would then be divided between any children and surviving spouse of civil partner – which could restricted the amount of inheritance received by the spouse.
Under the rules of intestacy, an unmarried partner has no right to any of the inheritance. This can lead to difficult situations for the surviving partner, but with a variation in place the beneficiaries of the estate could insure the partner is provided for.
If your estate was worth more than the nil rate band (£325k as of April 2009), and your spouse could only receive the first £250k under the Rules of Intestacy, your death would result in an instant inheritance tax payment of 40% of the amount above £325k. If everything goes to your spouse, there is no inheritance tax to pay between spouses, therefore a trust may be set up to avoid Intestacy and reduce the tax cost.
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How our Deed of Variation Service works
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Deed of Variation Frequently Asked Questions
Is there a timeframe for when a Deed of Variation must be issued?
You are free to make changes before or after the grant of probate has been issued. However for tax reasons any changes must be made within 2 years of the deceased person’s death.
Can a Deed of Variation be used to change executors?
No, a deed of variation is only to be used to change how an estate is distributed. For example, if the Will does not include someone that a beneficiary feels should have been included in the Will, such as grandchildren.
What are some of the main reasons for needing a Deed of Variation?
With many people’s circumstances being different, there are many reason for wanting to change a Will with a deed of variation, here are some of those reasons:
- You want your share of the inheritance to benefit someone else
- You wish for some or all of your inheritance to go to a charitable cause
- To reduce the amount of inheritance tax
- To avoid disputes and arguments within a family
- You would like to spread the inheritance out across all family members, such as those not included in the original Will
Can we create a Deed of Variation before probate?
Yes, Deeds of Variation may be made before or after obtaining probate, but if a deed is being made for inheritance tax or capital gains tax reasons then it must be made within 2 years of the deceased’s death.
As an Executor do I have to let beneficiaries know I am creating a deed variation
If you are an Executor named in the Will and you want to enter into a deed of variation the only person or people who need to be aware of the deed of variation are those that are adversely affected. The person whose share is reducing because of the deed must agree to the change. You as an Executor cannot unilaterally decide to give that person’s share to someone else.
Can I gift money back to a disadvantaged person once the Deed of Variation is signed?
This is definitive No. People who enter into a deed of variation are doing so knowing that they are being disadvantaged by the deed. If the person who makes the gain because of the document subsequently repays the beneficiary who was disadvantaged then this would likely to be deemed as tax avoidance. The person who is affected must agree to being disadvantaged and cannot gain later.
My Dad left his estate to charity but I don’t want them to get the money, can I create a Deed of Variation?
As a general rule this is also a definite no. You can write to the charity and appeal to their better nature and explain why you think your Dad would not have wanted that gift to take place after all. However, we regret your request is likely to be denied. Charities have a duty to maximise any inheritance that maybe left to them. You cannot create a deed of variation without the beneficiaries consent.
Do you offer a free Deed of Variation template?
No. For reasons outlined above, a deed of variation is a mechanism generally used to avoid tax, because of this there are certain tax clauses that need to be included within the instrument. For this reason it is not wise to supply a free template deed of variation, generally if a lay person is involved in outlining the terms of a deed of variation then undoubtedly it will go wrong. Our straight forward deed of variation costs just £295 plus vat. Call our probate team on 020 8150 2010 to discuss your options.
Does everyone who is named within the will need to agree to the deed of variation?
No, not everyone will need to agree to the variation of the Will, only those who will be affected by the changes need to agree for the changes to be made. However if the person isn’t legally able to make changes, such as a minor then their variation needs to be approved by the court Problems can also arise when a beneficiary does not consent to the changes made in the deed.
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A Deed of Variation can save an estate from Inheritance Tax
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Wanting to make a Start on your Will?
Making a Will is a website where you can make your Will online for as low as £29.50.
Preparing a Will and keeping it up to date
On average 1/3rd of people in the United Kingdom pass away without leaving behind a Will. In creating a Will before you death and ensuring that Will is kept up to date with all those you wish to inherit will save you family thousands of pounds and hours, if not days of work to make sure your estate is distributed correctly between those you wish to inherit. Deed of variations can be expensive and complex documents to put together so a professional is always advised when one is needed. We can help with the whole process, simply call us or send off our enquiry form.
Further complications can also arise if a Will is not left behind, for instance if the deceased left behind children under 18 years of age, they would automatically become beneficiaries; but being under 18 makes them minors so are unable to consent to any changes in a deed of variation. If this was the case, the variation would need to go through a court, thus complicating matters further.
Whatever your age its important to have a Will in place and to make sure that its kept current as you grow older. Your circumstances are likely to change throughout your life, you may get married, or have children, who then go onto have children of their own. You’re likely to acquire more and more assets as you grow older, so we encourage everyone to make a Will and to keep it up-to date so your estate is distributed correctly when you pass away. For estate planning help and advice visit IWC Probate Services.
Use a Deed of Variation to alter the estate of the deceased
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Additional questions about a Deed of Variation
Contentious probate disputes are often resolved with a Deed of Variation
An instrument of variation is another term for Deed of Variation
Deeds of Variation can be used after two years of death but won’t affect the tax position
A minor child cannot be party to a Deed of Variation
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What do I do with a Deed of Variation?
Once you have executed a deed of variation the document should be kept safe with the estate probate papers. Typically estate papers should be kept for a minimum of twelve years. However, if there is a surviving spouse, from our experience it is wiser to keep the documents and papers relating to the deed of variation for twelve years after the spouse passes away. For this reason at IWC Probate Services we offer a document storage service for wills, probate and papers related to a deed of variation.
Who signs?
A deed of variation is signed by the person or people who are party to the deed. Each signature on the deed of variation must be witnessed by an independent person. Independent means they are not married or affected by the instrument of variation. As a general rule of thumb try to avoid the children of the deceased and to be perfectly safe just do not use a relative of the deceased although there is nothing to suggest someone far removed from the affairs of the estate could not witness the deed.
Does my Deed of Variation need to be legalised?
Legalisation generally refers to attaching an Apostille to the document. Although this may be necessary if you are trying to prove the deed as a valid document outside of the UK, Legalisation would not be necessary in the UK. If you need help or advice with regards to an apostille or Legalisation of any probate related documents please contact our partners at Apostille and Legalisation Services Ltd.
Can I create a Deed of Variation for a foreign will?
A deed of variation is used in the UK to alter the distribution of an estate in the UK. These cannot be prepared for use to alter the distribution of an overseas estate. If this is what you are trying to achieve speak to our overseas probate team who can refer you to a third party firm in the country of origin.
Can a lay person create a deed of variation?
Yes. You do not have to be a probate solicitor to create a deed of variation. Technically speaking a lay person could create a deed of variation. That said this type of legal document is typically used to alter the tax affairs of an estate or perhaps beneficiaries as such if you need to enter into a deed of variation then it would be wiser to seek advice as opposed to trying to cobble together a document based on excerpts and free deed of variation documents or deed templates that may be found on the internet.
Are deeds of variation used to settle disputes?
Yes. Contentious probate matters are often resolved by the disputing parties entering into a deed of variation. If the document is being signed more than two years after the person died then this will not affect the tax position of the estate. Contentious probate matters can drag on for many months so if a deed of variation is likely to be needed it is wiser to seek advice as soon as feasibly possible
What is a notional will?
Notional will is a term typically used within a deed of variation of intestacy. If the deceased person died intestate, i.e without making a will, then when the deed of variation is created it will refer to being a notional will.
How many witnesses on a Deed of Variation?
In theory only one witness is needed on a deed of variation. But each signature has to be witnessed. The same witness can witness more than one party but if you want to avoid arguments or the possibility of someone being accused of coercion get your own witness and sign the document independently.
Can I close a trust with a Deed of Variation?
No. In order to close a trust within a will then a deed of appointment is generally used as opposed to a deed of variation. A deed of appointment typically appoints assets out of the trust.
What is an instrument of variation?
An instrument of variation is a deed of variation. The term instrument refers to a legal document.
Can my 17 year child enter into a Deed of Variation?
No. Anyone under the age of eighteen cannot enter into a deed of variation. Typically this would be just in case they are being coerced. If you need to alter the distribution of an estate which is going to minors then you may need to seek Court approval for any variation. This can be extremely complex and costly. If you wish to alter an estate that passes to minors please call us, we will be able to refer you to a probate solicitor for further advice.
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Further Answers to Important Questions
What is the purpose of a Deed of Variation?
The sole purpose of a deed of variation is to change the distribution of an estate that is being distributed by the deceased persons Will or the distribution as laid out by the rules of the intestacy. Instruments of variation are used as a legal way that can help to avoid inheritance tax and capital gain tax. Tax evasion is a crime but tax avoidance is perfectly legitimate. In 2015 it was reported that Labour leader Ed Milliband’s family used a deed of variation in order to avoid Inheritance tax. This created quite a furore in the media because at that time there were many stories about people coming clean about their “tax schemes”. Regardless the deed of variation is still a valid mechanism that can help a family legally avoid tax. Why wouldn’t Ed Milliband’s family use a deed of variation to legally avoid tax if the same opportunities were available to every other citizen in the country.
Is a Deed of Variation a good idea?
This is a difficult question to answer without knowing the full facts of the matter. The deed of variation exists as a mechanism to help people who need to change the distribution of an estate and can help people avoid inheritance tax and in fact capital gains tax. However, by its very nature someone is likely to be disadvantaged by the instrument, for that person it could be argued that creating a deed of variation might not be such a good idea. As detailed elsewhere on this site, a deed of variation is a bespoke document drafted specifically for a family set of circumstances, every estate is different, so it’s not easy to answer if a deed of variation is a good idea. Only you can judge based on what you are trying to achieve. If you are in doubt, just let our team know and they would be happy to refer you to a probate solicitor who can give you the correct legal advice.
How much is a Deed of Variation?
Our fees for a standard deed of variation service start at just £295 including vat, however this is a bespoke service and prices can vary. A deed of variation is not a “one size fits all” document. There are many variations, not least the number of people to be included in the document, whether assets are passing to spouse or perhaps to a trust and of the course the value and type of asset. Call our estates team now on 020 8150 2010 quoting DOV295 or send an email with details to admin@iwcprobateservices.co.uk. if you do require a fast track deed of variation service please make sure you send us a copy of the original Will, the death certificate and if granted a copy of the probate document. Preparation can greatly improve the speed of the service we offer.
How long does a Deed of Variation take?
As a general rule the time taken is reflected upon the complexities of the deed of variation. Typically we would offer a turn around time of between 3-5 working days, but as mentioned it depends on how complex the document is, how many people are involved, what advice they have taken and how quickly they communicate with us. If you require a fast track deed of variation service we can offer a same day service, again depending on the complexities, however this would be charged at a higher fee. If you have a deadline to meet, i.e the two years since death has nearly expired, then contact our deed of variation team who will talk you through the process of our fast track service.
What are the advantages of a Deed of Variation?
Here is a scenario that might help you understand why a deed of variation is used. Let’s suppose a man dies leaving his £400k equally between three of his four children. The Will was made fifteen years ago, perhaps whilst the excluded child was doing very well for himself and didn’t need the inheritance or perhaps because the man had fallen out with the excluded child. In the later years the circumstances of the excluded child’s life had changed and the man was always intending to update his will. When the man dies the three children realise that their sibling is excluded but they realise there was a very good reason for excluding him at the time when the Will was made and they all appreciate their father intended to make a new Will, but for one reason or another never got around to doing it.
They could just distribute the estate and each give their sibling £33,000 each and this would equalise matters. However the issue is that if one of those children subsequently pass away within the following seven years that gift of £33,000 is included in their own probate and estate calculations. If they all agreed and entered into a deed of variation then all three could sign a deed a variation giving their sibling the same equal share of the estate. In this way, provided this is done within two years of the father’s death, this money would not need to be declared in the event of the death of one of the children. As with all measures that have the potential to avoid tax the documents should be kept safe for at least 12 years.
Deed of Variations can ensure an Estate is distributed evenly.
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