Text Size:  A  A  A

Deeds of Variation

A deed of variation (sometimes called a 'deed of family arrangement') is used to vary or re-arrange the distribution of a person's estate after death rather than distributing it under the terms of the deceased's Will or under the rules of intestacy if there is no Will.

There are a number of reasons why those entitled to receive or share in the estate of the deceased may wish to vary its distribution. The main reasons include:

• Inheritance tax saving.
• Providing for someone who has not been included in the Will or is not entitled to share in the estate under the rules of intestacy, if there is no Will. For example, a partner or children from a previous relationship.
• Making greater financial provision for someone who has not been adequately provided for in a Will.
• Correcting uncertainties or defects in the Will.

In most cases, a deed of variation will require the consent of all those who are entitled to share in the property that is to be re-directed. However, there may be difficulties if those entitled are under the age of 18 or any greater age stated in the Will.

If the deed of variation is to be used to save inheritance tax and/or capital gains tax, there will be certain conditions to satisfy, the most important being that the deed must be completed within two years of the death. In addition to certain conditions having to be satisfied, there will be other tax consequences to consider, particularly in relation to the income tax position. It is recommended that legal advice is obtained at the earliest opportunity to ensure that the conditions are satisfied and the tax consequences considered.

If you are considering a deed of variation, although it will be regarded as varying or re-directing property for tax purposes, in other situations, it will be treated as a gift of an inheritance. This is particularly important if the person who would have been entitled to the property is in receipt of means-tested welfare benefits or is in care and receiving financial assistance from the local authority towards the accommodation charges. In these cases both the Department for Work and Pensions and local authorities may regard the deed of variation as a gift in deciding whether that person is entitled to continue receiving financial support.

For more information on Deeds of Variation, please call equityCare Legal Services direct on 01594 838940 or take a few minutes to complete our enquiry / request callback form and we will contact you as soon as possible.