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Michelle Gavin

Michelle Gavin

Partner & Head of Wills Trusts & Probate

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Have you inherited recently and plan to share your inheritance with members of your family or donate it to charity?  If so, then you should consider doing it under a ‘Deed of Variation’.

There are a number of reasons why you may wish to enter a Deed of Variation. These include: saving inheritance tax; to provide for someone who was omitted from the Will; or to pass an inheritance on to the next generation.

What is a Deed of Variation?

A Deed of Variation allows a beneficiary to pass all or part of an inheritance they have received on to someone else, and the recipient will be treated, for tax purposes, as it they inherited it directly from the deceased.

It can be made following a Will being left or where a person dies without making a Will (intestate).

For a Deed of Variation to take advantage of the Inheritance Tax and Capital Gains Tax benefits available, it is essential that it is finalised within two years of the date of death.

What Changes Can You Make?

A beneficiary is only allowed to make changes to their own share of the inheritance – the exact terms can be tailored to be as simple or complex as you need them to be. You might want to:

  • Redirect specific assets or fixed sums to different people
  • Give away your whole entitlement (e.g. to provide for the next generation)
  • Set up a trust.

The beneficiary losing their entitlement is not able to accept any form of incentive, whether financial or otherwise, to sign the document.

Only adult beneficiaries can vary their entitlement as minor children are unable to consent to any variation of their share.

A Deed of Variation can be done even if the administration of the estate has been completed and the deceased’s assets have been distributed.

Every situation needs to be assessed on an individual basis and advice should be sought at the earliest opportunity to ensure the document is correctly prepared and executed before the two year window expires.  We can guide you through the benefits and procedures for preparing a Deed of Variation, taking into account the implications for tax purposes, family dynamics and overall tax planning for the parties involved.

Michelle Gavin TEP is a Partner in and Head of the Wills, Trusts and Probate team at Band Hatton Button LLP.

Direct Tel:   024 7623 7379

Email:  MBG@bandhattonbutton.com