When a Will is read, it is possible to alter it when a person has been given an asset (including a trust within the Will) or via the rules of intestacy. If the beneficiary would prefer to change how they benefit or redirect who should benefit from this asset, this may be possible through a deed of variation.
Tax Planning: One of the Main Reasons for Seeking a Deed of Variation
One of the main reasons for seeking a deed of variation is related to tax planning. For instance, redirecting an asset to a different beneficiary can help to solve problems with inheritance tax.
Who May Execute a Deed of Variation?
Anybody who is given an asset through a Will or intestacy may execute a deed of variation as long as they have the mental capacity to do so and fit into the right age bracket, which is currently 18 years and older. Any parties who could themselves be beneficiaries to the redirected asset must agree with the deed of variation.
Formalities Required for a Deed of Variation
If a deed of variation is to be of any use when it comes to capital gains tax (CGT) or inheritance tax (IHT) purposes, certain formalities have to be completed. These include the document being in writing and executed as a deed, being executed within a time frame no longer than two years after the death of the Will’s owner, and including a clear statement of which inheritances will be affected and what has been changed.
Supposing the Property That is Being Varied Has Been Altered?
If the asset which is the subject of the deed of variation has been altered, it is still possible to execute a deed of variation.
Conclusion: Consider a Deed of Variation in Financial Planning
A deed of variation should be considered in financial planning in the long term. It can be a useful tool for tax planning and redirecting assets to more appropriate beneficiaries.
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