What is a Probate Deed of Variation?

In the United Kingdom, when a person dies, their estate must go through the process of probate, which involves validating the will and distributing the assets according to its terms. However, what happens if the beneficiaries of the will decide that the distribution isn’t fair or practical? This is where a probate deed of variation comes into play.

  1. What is a Probate Deed of Variation?

A probate deed of variation is a legal document that allows the beneficiaries of a deceased person’s estate to alter the distribution of the assets as set out in the will, or under the rules of intestacy if there was no will. This can be particularly useful if the original will does not reflect the current wishes of the beneficiaries or if there are tax advantages to be gained by changing the distribution.

  1. Why Would Beneficiaries Use a Deed of Variation?

Beneficiaries might opt to use a deed of variation for several reasons. They might want to:

Redistribute the estate to other family members or individuals who were not originally included.

Change the terms of the will to achieve a more equitable distribution.

Reduce the inheritance tax liability on the estate.

Address any oversights or mistakes in the original will.

  1. How Does a Deed of Variation Work?

For a deed of variation to be valid, it must meet specific criteria:

All beneficiaries affected by the changes must agree to the variation.

The variation must be made within two years of the deceased’s death.

The changes must be set out in writing and signed by all affected parties.

It must clearly state the intentions of the beneficiaries to vary the will and the details of the new distribution.

  1. Who Needs to Be Involved?

A deed of variation requires the involvement of all beneficiaries who are affected by the changes. Additionally, if the variation impacts the inheritance tax liability, HM Revenue and Customs (HMRC) must be informed. In some cases, legal advice from a solicitor can be beneficial to ensure that the deed of variation is correctly drafted and legally binding.

 

  1. Can a Deed of Variation Be Challenged?

Yes, a deed of variation can be challenged, although it is less common. Challenges typically arise if there are disputes among the beneficiaries or if someone believes that they were unfairly excluded from the variation. In such cases, it might be necessary to seek legal resolution, potentially involving mediation or court proceedings.

  1. What Are the Tax Implications?

One of the significant benefits of a deed of variation is the potential to mitigate inheritance tax. By redirecting assets to other beneficiaries or charities, the estate might qualify for reduced tax liabilities. However, it is crucial to notify HMRC about the deed of variation within six months of making the changes if it affects the inheritance tax due.

  1. Are There Limitations to a Deed of Variation?

While a deed of variation is a powerful tool, it has limitations. For example:

It cannot be used to alter the will if the deceased was insolvent.

It must comply with all legal requirements and deadlines.

It cannot override specific legal entitlements, such as those of a surviving spouse or civil partner, without their consent.

  1. What Are the Steps to Create a Deed of Variation?

Creating a deed of variation involves several steps:

Review the Will: Understand the original terms and identify the desired changes.

Agree on Changes: Ensure all affected beneficiaries agree to the proposed variation.

Draft the Deed: Write the deed of variation, specifying the new distribution.

Sign the Deed: Obtain signatures from all parties involved.

Notify HMRC: Inform HMRC if the variation affects inheritance tax.

File the Deed: Keep the deed with the will and ensure it is accessible for future reference.

Conclusion

A probate deed of variation is a flexible and beneficial legal tool that allows beneficiaries to alter the distribution of an estate. By understanding the process and implications, beneficiaries can ensure that the distribution aligns with their wishes and potentially reduces tax liabilities. If considering a deed of variation, consulting with a legal professional can help navigate the complexities and ensure compliance with UK law.

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