Changing a Will Post Death
CAN I CHANGE SOMEONE'S WILL AFTER THEY HAVE DIED?
Yes!...and it is actually quite simple to do. You simply issue a legal document called
a “Deed of Variation”.
A “Deed of Variation” enables you to change how assets are allocated in someone’s
Will after they have died.
What is a Deed of Variation?
A “Deed of Variation” is a document written by the beneficiaries of a Will that lets them change how the estate is distributed.
So, if you want to send some of the inheritance to someone who wasn’t included or simply change who gets what (or how much), you need to make a variation. As long as all beneficiaries of the Will are in agreement the variation can be made without having to formally contest the Will and go to Court to seek approval.
The one critical restriction to be aware of is that you only have two years to complete the Deed of Variation process before it then becomes unavailable.
When would you use a Deed of Variation?
The government states you can justify a Deed of Variation in the following circumstances:
- Reduce inheritance tax or Capital Gains Tax
- Provide for someone who didn’t inherit
- Transfer assets to a Trust
- Remove doubt or uncertainty in the Will
Fairness and recognition are primarily why changes are made to a Will after the person has passed away. Many Wills can often be very out of date and the deceased may not have changed their Will to reflect who the most appropriate beneficiaries should be at the time of their death.
A typical example is where a family friend has helped care for the deceased in their later years but the deceased had not updated their Will to reflect this.
Another reason might be that there were more grandchildren to split the Will amongst than was recognised in the Will at the time it was written…or maybe the split between direct children and grand children of the deceased is then regarded as unfair/uneven by the beneficiaries.
Another reason might be if you are in financial difficulty at the time of the death and you do not want to receive the wealth being passed down to you in the Will at that specific moment in case the Creditors coming after you for payment can then get their hands on it. You could arrange for someone else to receive your share and hold onto it until such time you are no longer at financial threat from third parties.
Does a Deed of Variation need to be registered?
Surprisingly, a Deed of Variation doesn’t need to be officially registered! All that is required is that ALL the beneficiaries of the Will, those affected by the changes, and any new inheritors must sign the document.
The “Executor” of the Will (the person nominated in the Will to execute it) must also agree to the changes and sign as well. At that point, the variations become legally binding.
The only time this Document needs to be “officially registered” is if, for some odd reason, the beneficiaries have chosen a variation that actually increases the amount of Inheritance Tax due. In that case a copy must be sent to HMRC.
Deed of Variation and Inheritance Tax
Inheritance Tax (IHT) is charged at 40% of the estate’s value over the £325,000 threshold (as at March 2022). If the estate is less than this, no inheritance tax is due, in which case you would not need to send a copy of the Deed of Variation to HMRC.
IHT is also not payable if the entire estate is passed on to the spouse, civil partner, charity, or a community organisation.
Deed of Variation and Capital Gains Tax (CGT)
CGT is a tax payable on any profit made on investments/assets valued at £6,000 or more. Examples of investments/assets that tend to incur CGT are Buy-to-Let Properties, Second/Holiday Homes, Shares, Loan Notes, Cryptocurrency and Business Assets.
You have an annual tax-free allowance you can earn from these investment of up to £12,300 (at March 2022) and the amount of Capital Gains Tax (CGT) you must pay varies depending on your current tax bracket.
A maths example of this would be:
The Deceased purchased a BTL (Buy to Let) property for £200,000 that was rented out to tenants. You inherit it, then ‘dispose’ of it by selling it for £300,000. You have made a profit/income of £100,000 – and it’s this £100,000 that’s taxed.
But, like Inheritance Tax, you can use a Deed of Variation to reduce this tax by changing how the property has been passed down in the Will. For example, Capital Gains Tax isn’t due on gifts to a spouse, civil partner, or charity. By making this sort of change to a Will you can reduce or even eliminate the Tax completely.
Deed of Variation and Intestacy (dying without a Will)
If someone has died without leaving a Will, this is known as dying “intestate”
When this happens, the estate is generally passed to the surviving spouse or civil partner. Depending on the size of the estate, the deceased’s children may also inherit.
If all appropriate parties can agree a Deed of Variation can be used to change this, letting you include other relatives, friends, or even charitable organisations. This is often used to make the handover of the Deceased’s estate as quick and cheap as possible.
Without this you could have to endure “Probate”.
Deed of Variation after Probate
“Probate” is the process of the Courts getting involved to decide how to split the Deceased’s estate (If they have left no Will) using legal guidelines to dictate the split even if this is against the wishes of the relevant beneficiaries!
Fortunately you can submit a Deed of Variation either before or after obtaining a grant of probate. So long as it’s completed within the two-year time limit after someone’s death, it will be considered.
Deed of Variation Timescale
The timescale for completing a Deed of Variation is around a month presuming that all beneficiaries agree and sign…unless…one of the beneficiaries is below the age of 18 or lacks the mental capacity to sign a legal document. If you find yourself in this situation with will need to go to Court to get authorisation.
How much does a Deed of Variation cost in the UK?
A Deed of Variation can actually be just a letter signed by all the affected parties, in which case it won’t cost you anything…HOWEVER…there is a very strong case for employing a Solicitor to ensure the document is legally watertight and cannot be challenged at a later date.
If you would like to learn more about Deeds of Variation and be introduced to a legal representative who could help you to produce a Deed of Variation, either email us at enquiries@princewealth.co.uk or simply click on the link below and complete the quick enquiry form and we will be in touch.
Disclaimer
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