There was some really good advice recently in Money Week which reminded us that Wills aren’t set in stone, they can be changed with a Deed of Variation, writes Olivia Meekin, a Partner in our Private Client team.
It is becoming increasingly common for beneficiaries to alter who benefits from a Will, not least to help reduce Inheritance Tax bills and help younger relatives.
Paul Campion, a chartered financial planner at Succession Wealth, told The Mail on Sunday, “We have seen a jump in the number of families wanting a Deed of Variation in the past year.
“This is due to an increase in unexpected deaths of older family members,” owing to the pandemic.
“The deceased often haven’t had time to check that their Will still reflects their wishes and the needs of their family. As a result, their family sometimes chooses to distribute assets in a different way to that set out in the Will.”
If you’re inheriting from your parents when you yourself are in your 50s and 60s and say, reasonably established or comfortably off, it makes sense to skip a generation and allow the estate to benefit your children, especially if they are trying to get onto the property ladder for example, and need a mortgage.
“Not your chance to eliminate your siblings from their inheritance”
Of course it would be possible to give your children the money you inherit directly but in order to do so Inheritance Tax free, you would have to have lived beyond the seven years required by the Inheritance Tax rules.
As Money Week elegantly puts it: “A deed of variation doesn’t give anyone a free hand to do what they like with someone’s will; this is not your chance to eliminate your siblings from an inheritance.
In order for a Deed of Variation to be valid, it must be executed within two years of the death and must be signed by all the beneficiaries who will be affected by the proposed changes. If any of the affected beneficiaries do not agree to the proposed alterations, then the Will cannot be changed.
If you are contemplating a similar situation, please get in touch. There is no specific form you need to fill in for a Deed of Variation but there is certain wording that must be included for it to be effective for tax purposes. I therefore would always recommend seeking professional legal advice to ensure all the legal requirements have been satisfied. A typical example is recognising that if any of the affected beneficiaries of the Will are under 18 then, as a minor, they’re not able legally to agree to any changes in the Will.
If you are in need of advice or assistance on any of the issues mentioned in this article please contact firstname.lastname@example.org or another member of our expert Private Client Team on 020 7631 4141 or email email@example.com
The above is correct as at 18 May 2021. The information above may be subject to change as this is a constantly evolving situation.
The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.