When someone dies leaving a will behind, this document should detail how they want their money, property and possessions to be distributed once they are no longer around.
However, there may be circumstances under which loved ones want to change a will after the death of the individual.
While the person who made the will may have done so with the best of intentions, beneficiaries may decide that certain assets should to go other relatives or friends instead.
In some cases, money will be redirected to children; in others, it may be redirected to charity.
A deed of variation
If you want to alter the distribution of a loved one’s estate, you can do this with what is known as a deed of variation.
Also known as a variation – or deed of family arrangement – this allows beneficiaries to rearrange or vary their entitlement.
A deed of variation can be used by any person who receives a gift under a will to redirect their inheritance to another person. This person can be chosen irrespective of whether or not they are named in the will.
Changes can be made provided all the beneficiaries agree.
What is a deed of variation?
What if there is no will?
Even if there is no will in place – meaning the estate will be divided by the law in a particular order, according to the “Rules of Intestacy” – it is still possible to make changes to the inheritance.
Once again, the key is to ensure that all the beneficiaries under the intestacy rules agree to vary the distribution of the assets.
Intestacy: What happens if I die without leaving a Will?
If you are looking to vary a will, this can be done before or after probate is obtained, and is separate from obtaining a Grant of Representation (the document which gives you the legal right to administer a deceased person’s estate.)
But it’s important to note that any changes must be made within two years of the death of the deceased.
And, to be valid, this paperwork must be signed by all executors and beneficiaries.
Reasons to change a will after death
There are several reasons why you may want to make changes to a will. These include:
• Balancing up bequests made to beneficiaries – if, for example, one child was left a smaller percentage than another
• Providing for someone who was left out of the will – such as when a grandparent leaves assets to the oldest grandchild, but does not update their will when another grandchild is born
• Rewriting the distribution of the estate so that it passes on in the most inheritance tax-efficient way – and to minimise capital gains tax liability
• Clearing up any uncertainty over the will.
Reducing inheritance tax (IHT) charges
If you are looking to avoid hefty IHT charges, you may want to alter someone’s will to share out the beneficiaries’ entitlements further.
IHT is payable if a person’s estate is worth more than £325,000 when they die. Anything inherited up to this amount is tax-free, but anything above this threshold will be taxed at 40 per cent.
For example, you may want to use a variation to a will to reduce IHT liability by skipping a generation.
Donations to charity in a will can also help reduce the amount of IHT which is due.
A deed of variation does not avoid tax. However, they can allow loved ones to take advantage of tax reliefs prescribed by the tax rules.
How to pay less inheritance tax
How to make changes
If you want to make a variation to a will, there is no need to fill out specific paperwork; you can simply write a letter. The key is to ensure it meets certain conditions.
For more information, visit Gov.uk/government/publications/inheritance-tax-instrument-of-variation-checklist-iov2.
If you are unsure about any aspect of changing a will, it is worth seeking professional help and guidance.
Equally, no matter whether you speak to an expert – or go it alone – the key thing is to ensure that all the beneficiaries and executors of the will are in agreement.
Making a deed of variation
The law says that, subject to strict conditions, a variation takes places as if it had been made by the deceased (and not by the beneficiary). It is then “read back” into the will of the deceased for IHT purposes.
If the deed of variation changes the amount of IHT due, a copy of the deed of variation must be send to HM Revenue & Customs.
Keep your will updated
While it is possible to change a will after someone has passed away, this should serve as a timely reminder of the importance of keeping a will updated during your lifetime as circumstances change.
How to challenge a Will