Varying the terms of a will: A guide to the law.
When someone makes a Will the terms of that Will generally reflect their wishes and who they would like to benefit from their estate. However, in certain circumstances the person benefiting from the estate could actually end up being disadvantaged by the terms of the Will. When this situation arises a Deed of Variation can sometimes help.
If, for instance, the beneficiary’s own estate is increased dramatically due to an inheritance, the terms of the original Will could be varied to reduce the impact. For a variation to be effective it needs to take place within two years of the death. More importantly, all the Executors and Beneficiaries will need to agree that the variation can take place. If they cannot all agree, the Deed of Variation would not be valid.
Deeds of Variation are usually used to avoid Inheritance Tax and Capital Gains Tax. If this is the case, it can generally be agreed between the parties that it is the best course of action to take.
Another example of where varying the terms of a will might assist is when a parent leaves their estate equally between their children. The children may well be wealthy in their own right and would not want to benefit from the estate as it would simply increase the potential Inheritance Tax liability upon their own death. If this is the case, and it can be agreed, then the deceased’s grandchildren could benefit instead, therefore bypassing the children altogether. However, if the grandchildren are under the age of 18, the Court would need to approve such an arrangement.
Other reasons for varying a Will may be to balance bequests if, for example, one child was left a smaller percentage than another. If it can be agreed, the percentages can be equalised in a Deed of Variation. It can also be used if one child is poorer than the other and would benefit more from having a larger share.
There is no need to register the Deed of Variation. As the Deed is essentially outlining an agreement between all involved parties, signing it shall ensure it is legally binding; there is no recourse to any party in doing this. The only pitfalls that you must avoid are that no one must be compensated for what they have given up and that none of the original assets were affected by a Gift with Reservation.
If you need help with varying the terms of a will then give us a call or send us an email.