What is a Deed Of Variation?

For additional tax planning and mitigation or to re-route legacies, there are post death variations available. If a Beneficiary does not want to keep his or her inheritance, they have three options. To give away which may have immediate tax consequences ( including Income tax,IHT, CGT),disclaim it which means it goes back into the Estate and is redistributed either as residue of the Estate or via intestacy or the better course of action would be to do formal variation of the Will. The Estate is charged IHT based on the new amended provision and Beneficiaries do not suffer adverse IHT.

In order to create a variation , there must be:

1. A written document ( usually a Deed). This must be completed after 3 Months , but within 2 Years of the death.
2. There should be an election made with reference to the various tax acts if required.

The main benefits of the Deed of Variation are

1. You can redirect Assets from the Settlor’s Estate post death and the effect is as if the Testator had gifted the Legacy as part of his or her Will
2. Helps to reduce tax liability of the Estate distribution
3. Estate is charged IHT on the basis of amended provision and therefore no adverse effect