Losing someone you love is never easy, and the legal and financial decisions that follow can feel overwhelming. One question that often arises during the administration of an estate is whether the distribution of assets set out in a Will can be changed after death.
In many cases, the answer is yes. A deed of variation is a legal document that allows beneficiaries to redirect some or all of their inheritance to another person or organisation. This guide explains what a deed of variation is, when you can use one, and how it can affect the tax position of an estate.
If you’d like advice specific to your situation, our wills and probate solicitors are here to help.
What is a deed of variation?
A deed of variation (sometimes called a deed of family arrangement or a variation of will) is a legal document that allows one or more beneficiaries (the people who inherit from an estate) to redirect all or part of their inheritance to another person or organisation after a death.
Crucially, a deed of variation does not change the original Will itself. Instead, for tax purposes, it is treated as though the deceased had made the change themselves. This “read-back” effect is what makes it such a powerful estate planning tool.
Deeds of variation apply in England and Wales. They can be used whether the deceased left a valid Will or died without one.
When can a deed of variation be used?
There are several common situations where a deed of variation can be useful:
- Skipping a generation: Passing assets directly to grandchildren rather than children, helping to avoid those assets being taxed again on the children’s deaths.
- Reducing inheritance tax: Redirecting assets in a way that reduces the Inheritance Tax (IHT) payable on the estate.
- Providing for someone left out: Including a person who was not named in the Will or who received less than the family considers fair.
- Making a charitable gift: Directing some or all of an inheritance to a charity, which can also unlock a lower rate of IHT.
- Correcting an intestacy outcome: Addressing a situation where the rules of intestacy (the legal rules that determine who inherits when there is no valid Will) produce an unintended or unfair result.
How can a deed of variation reduce inheritance tax?
When a deed of variation is properly drafted and contains the necessary election statements, it is “read back” into the estate for IHT purposes under section 142 of the Inheritance Tax Act 1984. This means HMRC treats the varied distribution as though it came directly from the deceased, rather than as a gift from the beneficiary who gave it up.
This can reduce IHT in several ways.
Skipping a generation: If a child inherits an estate and later passes those assets to their own children, the assets could be subject to IHT twice. A deed of variation can redirect assets directly to grandchildren, potentially avoiding that double taxation.
Charitable gifts: Leaving 10% or more of the net estate (the estate after debts and liabilities are deducted) to a qualifying charity means the remaining estate is taxed at a reduced rate of 36% rather than the standard 40%. A deed of variation can be used to increase the amount going to charity in order to qualify for this lower rate. Further guidance is available on the GOV.UK inheritance tax page.
For the deed to qualify for IHT treatment, it must include a statement from the beneficiaries confirming they intend section 142 IHTA 1984 to apply. Similarly, section 62 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992) provides that a variation made within two years of death does not constitute a disposal for Capital Gains Tax (CGT) purposes, provided the deed includes the equivalent election statement for CGT.
Our inheritance tax solicitors can advise you on which statements are needed and how to maximise the tax efficiency of any variation.
Can a deed of variation be used with intestacy?
Yes. A deed of variation is not limited to estates where a Will exists. If a person dies without a valid Will, their estate passes according to the rules of intestacy. These rules follow a fixed legal order of priority and may not reflect what the deceased would have wanted, or what the family considers fair.
Beneficiaries who inherit under the intestacy rules can use a deed of variation to redirect their entitlement, just as they could under a Will. This makes it a flexible tool across a wide range of estate situations.
What are the legal requirements for a deed of variation?
For a deed of variation to be legally valid, and to attract the available IHT and CGT benefits, it must meet all of the following requirements:
- It must be in writing (a signed letter can be sufficient in some cases, but a formal deed is strongly recommended).
- It must be signed by all the beneficiaries who are giving up part or all of their entitlement.
- It must be made within two years of the date of death.
- It must include a statement that section 142 IHTA 1984 applies, if IHT treatment is required.
- It must include a statement that section 62 TCGA 1992 applies, if CGT treatment is required.
- It must not be made for money or money’s worth, other than in exchange for another qualifying variation.
If the variation results in more IHT being payable on the estate, the personal representatives (the executors or administrators responsible for administering the estate) must also sign the deed, and HMRC must be notified within six months of the deed being made.
Full guidance on the basic process is available on GOV.UK’s page on changing a Will after a death.
Who needs to agree to a deed of variation?
Only the beneficiaries who are giving up part or all of their share need to sign. Other beneficiaries, the people receiving the redirected assets, and (in most cases) the executors do not need to consent.
As noted above, executors must sign if the variation increases the amount of IHT payable on the estate.
One important limitation applies where a beneficiary is under 18 or lacks mental capacity. In those cases, that person cannot validly consent to a deed of variation on their own behalf. An application to the Court of Protection or the Family Court is needed before any variation involving them can proceed. This is one of the key reasons why taking professional advice is important.
What is the time limit for a deed of variation?
A deed of variation must be made within two years of the date of death to benefit from the IHT and CGT read-back rules under section 142 IHTA 1984 and section 62 TCGA 1992.
A variation can still be made after the two-year window, but it will not carry those tax advantages. Any assets redirected after that point would be treated as a gift from the beneficiary themselves, which could have CGT or IHT consequences of its own.
If you’re thinking about a deed of variation, it’s worth acting promptly to ensure you remain within the deadline.
Do you need a solicitor for a deed of variation?
It is technically possible to write a variation yourself or to use a template. However, there are real risks in doing so:
- Missing or incorrectly worded tax election statements can mean the deed does not achieve the IHT or CGT treatment intended.
- An incorrectly executed deed (one not properly signed or witnessed) may be entirely invalid.
- Where trusts, multiple beneficiaries, or a complex estate are involved, the risks are considerably greater.
- Any mistake is difficult or impossible to correct once the two-year window has passed.
For most families, taking advice from a solicitor experienced in probate and inheritance tax matters will protect you from costly errors and give you confidence that the deed has been correctly prepared. If you’re wondering whether professional advice is worth the cost, visit our probate pricing page for guidance on what to expect.
Frequently asked questions about deeds of variation
Can you do a deed of variation without probate?
Yes. A deed of variation can be made before or after a grant of probate (the legal authority given to executors to deal with an estate) has been issued. What matters for tax purposes is that the deed is made within two years of the date of death.
Does everyone named in the Will need to agree to a deed of variation?
No. Only the beneficiaries whose share is being reduced need to sign the deed. Beneficiaries who are not giving anything up do not need to consent, and neither do the people receiving the redirected assets.
Can a deed of variation be challenged?
Yes, in certain circumstances. A deed can be challenged if a beneficiary lacked mental capacity at the time of signing, was under 18, or was pressured into agreeing through undue influence or duress. Where minors or adults who lack capacity are involved, court approval is required before any variation can take effect.
Is there a time limit for making a deed of variation?
Yes. To benefit from the IHT and CGT read-back rules, the deed must be made within two years of the date of death. Variations made after this point are still valid legal documents, but they will not carry the tax advantages described in this guide.
How much does a deed of variation cost?
Costs vary depending on the complexity of the estate, the number of beneficiaries involved, and whether there are trust or tax considerations to address. For guidance on what you can expect to pay, visit our probate pricing page.
Can a deed of variation be used to avoid care home fees?
A deed of variation should not be used with the primary purpose of reducing assets to qualify for means-tested care funding. Local authorities and HMRC may treat such arrangements as deliberate deprivation of assets, meaning the assets could still be counted when assessing care fee contributions. Anyone with concerns about care funding should seek specialist advice before taking any action.
How Devonalds Solicitors can help
At Devonalds Solicitors, we have supported families across South Wales through all aspects of estate administration, including the preparation and execution of deeds of variation. Whether your situation involves reducing an IHT liability, redirecting assets to a younger generation, or ensuring that someone who was overlooked is properly provided for, we’ll work with you to find the right solution.
We provide clear, practical guidance on costs from the outset. You can find information on our fees on our probate pricing page and our wills pricing page.
To speak with a member of our team, contact us at any of our eight South Wales offices:
Call us on 01443 779050 or use our online contact form to get in touch, and we’ll get back to you as soon as possible.