Deeds of Variation (sometimes known as ‘Deeds of Family Arrangement’) allow beneficiaries to redirect assets they have inherited to another person.
In certain circumstances, a Deed of Variation could involve completely rewriting the Will of a person who has died and redistributing the estate.
For example, a beneficiary under a Will could execute a Deed of Variation to transfer half of their share of the estate to their children, in equal shares.
Why create a Deed of Variation?
Deeds of Variation have certain tax advantages as a person receiving assets by way of variation is treated as having received them from the Will of the deceased. This avoids the Inheritance Tax rules which require an individual making a gift to survive that gift by seven years in order for it to fall outside of their estate for inheritance tax purposes.
Importantly, a Deed of Variation must be completed within two years of a person’s death in order to benefit from the inheritance tax advantages. Certain formalities also need to be observed and the taxation rules which apply can be complex.
This can be a complex area of law and we recommend that you contact our specialist Wills and Tax Planning lawyers to discuss Deeds of Variation in more depth.
