Generally speaking, you are allowed to leave your assets to whoever you like in your will. There are however exceptions to this principle of what’s known as ‘testamentary freedom’. For example, certain people can make a claim against your estate if they think they have not received reasonable financial provision – irrespective of the terms of your will. Or the deceased may have promised someone a share in their estate that’s not reflected in the will. That person may potentially make a financial claim against the estate. Technically claims like these don’t alter the actual will itself but they will nevertheless change the way the testator’s wishes as expressed in the will are implemented.
But what if, after death, one or more of the beneficiaries wish to give up their benefit under the will and give it to someone else? Can they change the will to do so?
The short answer is yes. In such cases it is possible for the person or persons who would have benefitted under the will to enter into a post-death deed of variation, or ‘deed of family arrangement’. We discuss these below and explain how they differ from will disclaimers, another way a beneficiary can effectively change a will by giving up their entitlement under it.
What is a Deed of Variation?
A Deed of Variation is a formal legal document prepared by a wills and probate solicitor that puts into effect the wish of a beneficiary under a will to direct their entitlement to someone else. It can be used in relation to any kind of entitlement including property, cash or a share in the residuary estate (what’s left after all inheritance tax, expenses and legacies/gifts under the will have been made).
You can redirect all or part of your inheritance, but the deed can only cover assets you are entitled to. That is, you cannot use a Deed of Variation to redirect someone else’s entitlement under the will.
Why use a Deed of Variation?
The motivation for a beneficiary to create a Deed of Variation can vary, but they are often used because of:
- Inheritance tax reduction – a Deed of Variation can help you use all available inheritance tax reliefs more efficiently. For example, a surviving spouse can use a Deed of Variation to pass some or all their inheritance directly to their children to reduce the estate’s liability to inheritance tax. Similarly by donating some assets to charity using a Deed of Variation inheritance tax may be mitigated to some degree
- A moral obligation felt by beneficiaries to make provision for someone who has been left out of the will
- A change in circumstances that are not reflected in a will made many years before the death of the testator. For example, the existence of a long term partner who has not received any benefit under the will
- Potential disputes – if there is a possibility that someone may make a claim against the estate under the Inheritance Act, a Deed of Variation agreed by the beneficiaries could give the potential claimant a sum of money to satisfy their claim and head off any expensive legal proceedings
It’s worth pointing out that Deeds of Variation are also used when there is no will and the beneficiaries under the intestacy rules wish to change the way the estate is due to be divided under those rules.
What are Disclaimers?
Disclaimers are similar to Deeds of Variation but are of more limited scope and less flexible. Where a beneficiary does not want the inheritance they are entitled to, they can turn the benefit down and sign a disclaimer. But unlike a Deed of Variation they can’t choose how their inheritance will be used, and they must disclaim all of their entitlement.
Contact Us
If you think a Deed of Variation might be appropriate for you, please call us on 01492 860420 or contact the team online. The Deed can be executed at any time during the administration of the estate. However if you are hoping to reduce IHT, the Deed should be formalised within two years of death. Gamlins Solicitors LLP has a network of offices across North Wales, and we can arrange an in-person appointment at the office that’s most convenient for you or a remote appointment if you prefer.
