Deeds of Variation
When someone dies leaving a Will they often detail how they want their assets to be distributed. This may have been the best intention of the deceased however the beneficiaries of the Will may wish to vary their entitlement.
A Deed of Variation (also known as a Deed of Family Arrangement) is a document that allows beneficiaries to rearrange or vary their entitlement due to them. Some beneficiaries may decide that their entitlement should be redirected to their children (the next generation), siblings, friends or charity.
A deed of variation can be used to vary the entitlement under a Will or to vary the entitlement of a beneficiary under the intestacy rules when someone dies without a Will.
It is important to note that if you are thinking about varying your entitlement from an estate there is a time limit of two years from the date of death of the deceased to do so.
Why Vary a Will?
There are a number of reasons why you may wish to vary your entitlement;
Provide for someone who was left out of the Will
Move the deceased’s assets into a trust
Clear up any uncertainty over the Will
Using a deed of variation to settle a claim under the Inheritance (Provision for Family and Dependents) Act 1975 could avoid costly litigation. The deed could also assist in reaching a compromise where there is contention over the provisions of the will.
To achieve its aim, it is always important to remember the time limits and requirements for incorporating the correct tax statements for a deed of variation to be effective as intended. If done correctly, they offer a great deal of flexibility and scope for tax planning.