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Deed of Variation

What is a Deed of Variation?

A Deed of Variation is document created after your death that your estate administrators or executors can prepare and sign to alter the distribution of your estate. There are generally two types of Deed of Variation, firstly there is a Deed to alter Intestacy secondly there is a Deed to alter your Will.

When would a Deed of Variation be required?

If you died intestate (without a will) your estate has to be distributed under the Rules of Intestacy. This could mean that your spouse would be restricted in the amount of inheritance that they could receive. Often this causes hardship so a Deed of Variation of Intestacy could be created which could alter the amount the spouse would receive.

Some would then say why should I make a will if the problem can be resolved after my death. The answer is quite simple, it costs a lot more to create a deed of variation than to create a will.

There are other more important reasons too, if your estate was to pass under intestacy and there was a need to create a deed of variation, this could not be done if you had children under the age of 18 as the children would become beneficiaries and in order to create a deed of variation you need all of the beneficiaries approval. Children under the age of 18 are not premitted to consent to a deed of variation.

Paying more inheritance tax

If your estate was above the nil rate band (£325k April 2009), without a will your estate would pass under intestacy, if your spouse could only inherit the first £250k as per the Rules of Intestacy, your death would create an immediate inheitance tax bill of 40% of everything about £325k. If everything passes to your spouse then there is no inheritance tax to pay between spouses so a Deed of Variation could be created to alter intestacy and thus mitigate the tax bill. However returning to the paragraph above if you had children under the age of 18 then a deed of variation could not be created and the tax would have to be paid. The only alternative is a lengthy court battle with the Inland Revenue.

For further information please contact us on local rate 0845 600 3527

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