Deed of Variation
If you are a beneficiary of an estate under a Will or intestacy, it is possible for you to redirect your inheritance if you so wish to do so.
This can be achieved by way of a Deed of Variation.
A Deed of Variation can be an effective tool for Inheritance Tax planning, either in respect of an Inheritance Tax saving to the estate or Inheritance Tax planning for the beneficiary.
It can even be a way of including someone as a beneficiary of an estate who did not benefit previously, or making sure someone who was left out gets something.
The effect of the Deed of Variation is that the gift is seen to be from the deceased, not from the person entering into the Deed of Variation. This can be useful from an Inheritance Tax planning point of view as it avoids the issue of the “seven year rule” that applies to Potentially Exempt Transfers when an individual makes a gift.
To be effective, as a beneficiary, you must enter into the Deed of Variation no later than two years from the date of death of the deceased.
A beneficiary can only vary their own entitlement, they cannot vary anyone else’s entitlement. But it may be that all beneficiaries agree with the same course of action and, if this is the case, then they can all be parties to the same Deed of Variation.
However, a Deed of Variation cannot be used to alter the entitlement of someone under 18 years of age as they cannot legally consent to the variation.
Here at Richard Reed our experienced team is on hand to assist you.