I’ve heard I’m going to receive an inheritance, but I want to pass it to someone else.  Can I do this, and what are the tax consequences?

You can’t change a loved one’s Will after they have died; however, the law does allow you to redirect what you’ve been given to someone else, if you would like to. 

Equally, if your loved one dies without leaving a Will and the law allocates you some of their estate under the intestacy rules, you may wish to change what you get.

How can I redirect my gift?

Maybe you’d prefer some of your gift to go to charity, or to a child who wasn’t born when the Will was drawn up.  Or maybe you’d like to “even out” the gifts by redirecting your share to others.  Application of the intestacy rules can mean that the wishes of the person who died were not reflected, producing a result that is unfair and doesn’t recognise relationships that were important to them, for example, unmarried partners, close friends or step children.    

This is where a Deed of Variation comes in.  

You can only use a Deed of Variation to change your gift under a Will or the intestacy rules.  You can’t use it to increase your gift, nor can you change other parts of the Will, such as the names of the executors or guardians appointed to look after children.   

Are there any tax benefits?

A Deed of Variation can also a helpful way of keeping the Inheritance Tax (IHT) bill as low as possible.  For example, you may wish to vary the Will to make the best use of available tax exemptions, gain tax relief by making gifts to charities, or avoid potential double taxation by passing assets instead to younger members of the family.  All of this means that more of what was left by the person who has died is available to their family.    

Any changes made via a Deed of Variation are treated for tax purposes as if they were part of the Will originally.  

Should I tell the other beneficiaries if I’m thinking about a Deed of Variation?

It’s a good idea to let other beneficiaries and executors know about what you’re trying to do and why, so that they understand the possible consequences, even if they are not affected.  And if others are affected, you will need their agreement.  You might face issues if others don’t agree, or if, for example, one of the beneficiaries is under 18 and can’t agree.  

If you decide to go ahead and vary the Will, you must have the Deed of Variation in place within 2 years of the person’s death.  It can be made before or after Probate is granted.   

How do I get a Deed of Variation?

There are special conditions which must be met to make sure that a Deed of Variation is valid and has the desired effect.  Also, you must inform HMRC of any changes to the taxation of the estate which result from the Deed of Variation.  For these reasons, it is vital that you consult with specialist legal advisors.  As much of the information needed to consider the Will’s provisions and the Deed of Variation is paper-based, it may help to consider a solicitor local to you in Marlow or Oxfordshire. 

For more information, please contact Bethan Chant at bethan.chant@theburnsidepartnership.com.