A deed of variation (DOV) is a legal tool that allows the beneficiaries of an estate to change what they are entitled to receive under the terms of a will, and pass on all or part of their inheritance to another person. This may include cash, property, stocks and shares, a beneficial interest in a trust, and everything else that is left in a deceased person’s estate.
This legal document must be agreed by all the beneficiaries who stand to lose out by the variation. It can redirect an inheritance in the name of the deceased to any person, regardless of whether they were named in the original will. If the alteration affects children (both born and unborn), or anyone under the age of 18, a court application will be necessary to obtain their legal consent to the variation.
Reasons for Using a Deed of Variation
There are a number of reasons why a beneficiary might choose to set up a deed of variation, including tax efficiency and minimising Inheritance Tax (IHT) and Capital Gains Tax (CGT). A DOV is also commonly used to correct uncertainties and inconsistencies in an existing will. Typical reasons for drafting a DOV include:
1) Tax Efficiency: Gifting 10% of an estate to charity can reduce the IHT rate on the remainder from 40% to 36%. Liable estates (worth more than £325,000) must pay the 40% rate before any outstanding money or assets can be passed on. Beneficiaries may also choose to redirect money among themselves to minimise the tax they owe, or move assets into a trust.
2) Fair Distribution: If it is agreed between the beneficiaries that the distribution of an estate is unfair and unequal, then a deed of variation can transfer all or part of an inheritance to another person. This is often the case when a family member is left out of a will and in poor financial circumstances.
3) Party Left Out Of Will: A person may not have been included in a will for various reasons, such as having been born since the will was drafted. If the deceased had not updated his will recently, a close family member, such as a grandchild, may have been inadvertently left out. Alternatively, a beneficiary may simply want to pass on an inheritance to a charity or any third party.
4) No Will Written: If a person has died intestate (without a will), a loved one may not have been provided for under the rules of intestacy or else these rules may not suit the wishes of the beneficiaries.They may then agree to use a DOV to divide up the deceased’s assets in a fair and tax-efficient way.
Solicitors Specialising in Deeds of Variation
To influence tax matters, a deed of variation needs to be made within two years of the deceased’s death. A DOV cannot be changed or revoked once it has been executed, making it essential to get matters right first time round. Bartletts Solicitors have been handling deeds of variation and wills and trusts matters across Cheshire and Merseyside for over 40 years. Our teams in Liverpool and Hoole, Chester will be happy to offer you a no obligation quotation.
Make an enquiry today
For further information or advice about Deeds of Variation or Wills and Probate services please contact Bartletts Solicitors today at our Liverpool, or Chester offices or email advice@bartletts.co.uk.
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