Varying Wills After Death

It is widely thought that a will can be changed after the death of the person who made it (the testator). Although this can be the practical effect of arrangements between beneficiaries, technically post-death variations do not in fact vary the will itself.

 

There are two ways by which the effects of a will can be varied. The simplest of these is a disclaimer, whereby the beneficiary under the will refuses to accept the bequest. A disclaimer must be made before any benefit under the will is accepted by the beneficiary. Disclaimers are normally only made when the property passing under the will is subject to a significant detriment (for example a building which needs massive expenditure for repairs). If a specific bequest is disclaimed, the bequest will fall into the residue of the estate (the assets left after all specific bequests have been made). If the residue of an estate is disclaimed, it passes according to the laws of intestacy.

 

The other way of rearranging the distribution of an estate after death is by way of Deed of Variation. These require the agreement of all the affected beneficiaries and are often undertaken to redirect all or part of an inheritance for Inheritance Tax (IHT) purposes.

 

For Capital Gains Tax (CGT) and IHT purposes, a valid Deed of Variation is regarded as being a variation of the will, provided that it is not a sham, no inducement is given to the beneficiaries to persuade them to sign it, it contains the correct tax wording and it is executed within two years of the death. Only a single Deed of Variation can be executed in relation to any given property. However, it is possible to execute a Deed of Variation even if the administration of the estate is complete.

 

For IHT purposes, a Deed of Variation is treated as if it were made by the testator. Normally, the CGT treatment is similar, although there can be complications, especially when trusts are created under the will. For Income Tax purposes, the Deed of Variation normally takes effect when it is executed, not on the date of death. Again, there are circumstances when the Income Tax effect can be retrospective.