A Deed of Variation (also known as a Deed of Family Arrangement) may be used, within two years of a person’s death, to rewrite that person’s Will or, if they have died without a Will, to write one for them.
Deeds of Variation provide a means of saving inheritance tax after a person has died. Inheritance Tax is a combined gift tax and death duty. This tax is applied to gifts and deemed gifts made in a person’s lifetime and, upon death, on their estate. For example, if a husband and wife did not do any tax planning during their joint lifetimes, the surviving spouse may be able to save tax for the family by means of a Deed of Variation after their husband or wife has died.
If the deceased died intestate (i.e. leaving no valid Will) a Deed of Variation provides a means of overriding the arbitrary division of his/her estate between spouse and blood relatives that is prescribed by law.
There are many circumstances in which the deceased’s executors and beneficiaries may wish to sign a Deed of Variation. For example, it may be felt that someone close to the deceased had not been properly provided for. Alternatively an affluent elderly beneficiary might wish to redirect his/her legacy to his/her children.