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FAQ - Deeds of Variation
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Can a Deed of Variation be used to vary the rules of Intestacy?
A person who dies without making a Will is said to have died 'intestate' and thus the statutory rules of intestacy apply. Sometimes, this can result in an unfair distribution of the estate or a situation where more inheritance tax is payable than would have been if a Will had been made. A Deed of Variation CAN be used to vary the statutory intestacy rules.
Example:
Stan dies leaving a wife Beth and a son, Stuart. His estate is worth £300,000 and he did not make a Will. Under the rules of intestacy his widow would receive all the personal chattels and the first £125,000 of the estate free of tax and costs. Beth would also be entitled to a life interest in one half of the remainder of the estate i.e. to income from one half of the residue. The other half would pass to Stan and Beth's son, Stuart. Thus Stuart would be entitled to the remaining £87,500 from the estate.
If Stuart felt that his mother was not adequately provided for, he could pass all/part of his share in the estate to his mother by way of Deed of Variation. Alternatively, if Beth had more than sufficient income and did not require the life interest in residue she could pass that on to her son by way of Deed of Variation.
The Will appears to be out of date and does not take into account all beneficiaries - can it be changed?
Yes. A Deed of Variation might be particularly useful in these circumstances. The Will may fail to take into account new grandchildren born since the date the Will was made, or beneficiaries might wish to vary the amount of legacies to reflect present day values. Additionally, an old Will may fail to take into account new legislation, particularly in relation to inheritance tax and the available exemptions.
What assets can be varied?
- Cash Legacies
Example:
Deceased's Will left £50,000 to James. James can change the legacy or redirect it to his children by way of Deed of Variation.
- Gifts of Items or Collections of Items
Example:
Deceased's Will leaves collection of valuable first edition books to his two adult children, Sharon and Steve. Either or both Sharon and Steve can redirect the gift to their own children by Deed of Variation.
- An absolute share in the residue of an Estate
Example:
Deceased's Will leaves the residue of the estate 'to my children Jordan and Ben in equal shares'. If either or both Jordan and Ben want to forgo their share to pass it to someone else, they can do it so by Deed of Variation. Jordan might redirect his half share to be held on trust for his minor daughter Cybill until she attains the age of 18.
- A Share of the Estate under the Intestacy Rules (see above)
- Joint Property
Where a property is jointly owned, whether a Will is made or the rules of Intestacy apply, the property does not comprise part of the estate. Thus the widowed party automatically receives the deceased's portion of the property. It is possible for the widowed party to redirect the deceased's share of the property to another beneficiary other than themselves by Deed of Variation. See also Wills, Property Ownership & Declarations of Trust.
If you have any questions which have not been answered already, please do not hesitate to contact me.
