How can you vary the effect of a Will?
Although your Will itself cannot be altered after your death, its effect can be if there is a disclaimer or a variation.
A disclaimer is used when a beneficiary decides that they do not wish to accept the gift left to them in a Will. Their share goes back into the testator’s residuary estate. For more information on disclaiming a gift, see What is a disclaimer and how do you disclaim a gift?
A variation happens when a beneficiary of a gift decides that they would like their gift to go to someone else – in whole or in part.
Variations and disclaimers can also be made when the deceased was intestate.
Another way in which changes may be made is when someone makes a claim for financial provision out of the estate, for example a member of the family or a dependant who feels that they have been unfairly treated in the Will, or perhaps excluded from it. For more information, see Can you disinherit family and dependants?
In addition, the Will itself may be challenged if, for example, it can be shown not to have been properly signed and witnessed, or if the person making the Will was not mentally capable at the time (for more information, see Who can make a Will?).
To find out more about how a Will should be signed and witnessed, see Signing a Will – getting it right and Who can witness a Will?
Variations
When the recipient of a gift under a Will wants someone else to receive the gift, or part of it, then they can make a variation.
For example:
a person is left £10,000 under a Will, but he would like it to go to his son instead;
the deceased person’s daughter is to receive a 50% share in the family home, but she decides that half of that share is to go to her brother; or
the deceased person’s son inherits the whole estate, but wants all the jewellery to go to the deceased person’s niece.
A variation can be made so that the gift goes to more than one new beneficiary. For example, a gift of property to the deceased’s sister could be varied to pass to her three children.
Of course, you could say that it would be easy for the beneficiary simply to give the property or asset to the person they want to receive it, but there are good reasons for making a variation instead.
A variation would mean that there was no tax risk to the original beneficiary, either in inheritance tax or capital gains tax, because the beneficiary will not be considered to have owned the property or given it away.
So it may be possible to minimise the inheritance tax liability of the estate using a deed of variation. If this is your aim, you should take specialist professional advice.
Joint gifts
A person can only vary a gift or share that they are to receive themselves. But often people are left assets or property jointly with others.
For example:
the testator’s three children jointly inherit the family home;
a mother’s residuary estate is left to the children in equal proportions; or
£100,000 is left to be shared equally between the deceased person’s three siblings.
If all affected beneficiaries of the Will agree, they can change the way in which the Will shares out the estate.
So, using the above examples:
the testator’s children might agree that their aunt should also have a share in the family home;
the children want to make a donation from the estate to a particular charity which their mother supported;
the siblings could agree that instead of the shares being equal, they are divided in shares of 40%, 40% and 20%.
In each case, the value of all the beneficiaries’ shares would be affected. That’s why they would all have to agree to any variation.
If only one of the affected beneficiaries wanted to vary the gift, then they can only do so out of their own share.
For example:
the children are left the residuary estate, and one of them wants to make a gift to charity but the others do not agree.
In that case, the generous-minded one can make a variation that makes a gift from his share after the estate has been divided.
How variations work
A variation does not involve actually changing the Will itself, but when a variation is made the Will takes effect as if it had been changed by the variation.
If done by deed of variation, this is legally binding and the estate must be distributed as if the changes had been included in the original Will.
A variation is used when the beneficiary wants to transfer their entitlement to someone else. If the beneficiary wants to give up some or all of their share entirely, without specifying who it should go to, that would be a disclaimer, and a deed of disclaimer should be used.
A variation should be formal and made in writing, and the best way of doing this is by a deed of variation.
The deed is an agreement between the beneficiary named in the Will, the person who will be receiving the gift after the variation, and (ideally) the personal representatives.
It describes, in legal language:
the gift that the beneficiary was due to receive under the Will; and
how that gift is now to be made to the new beneficiary instead.
As a deed, it will need to be signed by two competent witnesses. Good practice is that the witnesses should not be people mentioned in the Will, or members of the family.
Then the Will has effect as if the gift had been made to the new beneficiary.
Variation in return for compensation
If anything more than a simple variation in favour of a new beneficiary is being contemplated, a bespoke document would be necessary.
For example:
There is more than one beneficiary of a property – such as a house being left to all the children of the deceased. One or more of them might wish to vary the legacy in favour of the other(s), in return for compensation to the value of their ‘share’.
A simple deed of variation is not sufficient for this, as the compensatory payment would not normally be recorded within a simple deed. It's not a requirement to record such payments, but it is advisable to guard against any subsequent dispute as to whether the monies were or were not paid.
Do the personal representatives have to sign a deed of variation?
Only if the variation increases the amount of inheritance tax payable on the estate. But it is good practice to have them sign, as well as the beneficiaries, to make it clear that they are aware of the changes to be put into effect.
When may the variation be made?
A variation may be made at any time – before or after grant of probate has been obtained. It can even be done if the administration of the estate has been completed and the deceased’s assets distributed. But there are two important points to remember:
if it is made for inheritance tax purposes, the deed of variation must be made within two years of the death or it will be ineffective for those purposes; and
the longer after the death it is left – especially if the estate has already been administered – the more difficult it will be to redistribute assets or property.
When a variation cannot be made
There are certain exceptions:
children (under 18) cannot consent to a variation;
the same property cannot be redirected more than once; and
you cannot enter into a variation as a result of being offered payment from someone outside the estate.
Intestacy
If a deceased person died intestate, then a person who would receive their estate or a share of it under the rules of intestacy can make a variation of their share