A last will is not necessarily the final word on how an estate will devolve on the testator's death. It is possible to vary a testator's will through a deed of variation.

Why use a deed of variation?

A beneficiary may want to provide for an individual who has greater need of funds than him/herself, have children who would benefit from receiving a share of the estate, or may decide to reroute funds direct to the next generation down.

Another reason to vary an estate might be if the testator's family circumstances have changed, for example, a new grandchild who was not born when the will was drafted.

If a deed of variation is completed within two years of the testator's death, the variation can take place retrospectively for inheritance tax and capital gains tax purposes. The effect is that it is as if the deceased left their estate direct to the new beneficiaries.

What are the requirements?

• The instrument of variation must be in writing. It is good practice to execute a deed as this will ensure that the variation is enforceable.

• The variation must be made by the original beneficiary. They must be of full age and capacity.

• The deed must indicate which asset is the subject of the variation and that the variation changes the destination of the asset.

• The original beneficiary must not receive payment from outside the estate in return for giving up their entitlement.

• The deed must contain a statement of intent, specifying that the beneficiary elects for the relevant sections of the Inheritance Tax Act 1984 and the Taxation of Chargeable Gains Act 1992 to apply.

Once a variation has been made it cannot be undone, so it is always important to take legal advice before entering into a deed of variation.

  • Daniel Church is a partner at award-winning law firm VWV, which has offices in Clarendon Road, Watford. Get in touch on 07387 025 971 or dchurch@vwv.co.uk