When someone dies, their estate is distributed according to the terms of their will, or under the rules of intestacy if no valid will exists. In most cases, this distribution reflects the deceased's wishes and is accepted by the beneficiaries. However, there are situations where the beneficiaries may wish to change the way the estate is distributed. This is where a deed of variation can be used. A deed of variation is a legal document that allows beneficiaries to redirect their inheritance to someone else or to rearrange the way the estate is shared. It is often used to resolve family disagreements, to provide for people who have been left out of a will, or to reduce the inheritance tax payable on an estate. But one of the most common questions asked is: What does it cost to put a deed of variation in place?
A deed of variation is an agreement, signed by the beneficiaries of an estate, which changes how the estate is distributed. It can only be made after the death of the person who owned the estate. Unlike making or updating a will, a deed of variation is not about expressing the testator's wishes but about the beneficiaries choosing to alter their own entitlements.
For example, a beneficiary who inherits everything under a will may decide to share their inheritance with siblings who were left out. Alternatively, parents who inherit from their adult child may redirect part of their inheritance to grandchildren. These decisions are often motivated by fairness, family harmony, or tax efficiency.
Probate is the legal process of proving a will and administering the estate. Executors or administrators are responsible for distributing the estate in accordance with the will or intestacy rules. However, once probate has been granted and the estate is being administered, beneficiaries may decide they would prefer a different arrangement.
A deed of variation does not change the will itself, but it does change how the estate is treated for legal and tax purposes. If executed correctly, HMRC will accept the deed as though the distribution had always been made in the varied form. This can reduce inheritance tax or capital gains tax liabilities, benefitting the estate and the beneficiaries alike. Executors must be informed of the deed, as it directly affects how they distribute the estate, but the variation is initiated and agreed by the beneficiaries, not the executors.
Only beneficiaries who are entitled under the will or intestacy rules can make a deed of variation, and they can only do so in relation to their own share of the estate. For instance, if two siblings inherit equally, one sibling may vary their own share but cannot alter the other's entitlement without consent.
If the variation affects inheritance tax or capital gains tax, all affected beneficiaries must agree and sign the deed. Where beneficiaries are minors or lack capacity, the court's approval is needed. This ensures that vulnerable beneficiaries are not disadvantaged by changes made by others.
The cost of preparing a deed of variation depends on several factors, including the complexity of the estate, the number of beneficiaries involved, and whether tax advice is required. At its simplest, a straightforward deed of variation that makes a minor adjustment to the distribution of an estate may cost a few hundred pounds in legal fees.
More complex deeds, involving multiple beneficiaries, tax planning, or significant assets such as property or shares, can cost significantly more.
Legal fees usually cover drafting the deed, advising beneficiaries on the implications, and ensuring the deed complies with all legal requirements.
Because deeds of variation often have tax consequences, solicitors frequently work alongside tax advisers to ensure the arrangement is as efficient as possible. This additional expertise can increase costs, but it also ensures that mistakes are avoided and that HMRC will accept the variation.
It is also important to remember that legal costs are usually borne by the beneficiaries requesting the variation, not by the estate itself. This is because the estate is being administered according to the original will or intestacy, and the variation represents a change made voluntarily by the beneficiaries.
A deed of variation must be completed within two years of the date of death if it is to be effective for inheritance tax and capital gains tax purposes. This time limit is strictly enforced, and HMRC will not recognise late deeds.
From a probate perspective, this means that executors and beneficiaries must act relatively quickly if they wish to make a variation that provides tax benefits. While probate can take many months, sometimes over a year, it is still possible to execute a deed of variation during the administration process, provided it falls within the two-year window.
Although deeds of variation carry a cost, the potential benefits can be substantial. They can prevent disputes by ensuring family members are treated fairly, especially where the original will or intestacy leaves someone out. They can also provide opportunities for inheritance tax planning by directing assets to the next generation or to charities, helping to reduce the overall tax burden on the estate.
For example, where an adult child inherits a substantial sum from a parent but does not need the funds personally, they may choose to redirect part of their inheritance to their own children. Without a deed of variation, the assets would pass into the child’s estate and may be taxed again on their death. By using a deed of variation, the inheritance can pass directly to the grandchildren, reducing the likelihood of inheritance tax being charged twice.
Another common use is to direct part of an inheritance to charity. Because gifts to charities are exempt from inheritance tax, this can reduce the overall tax liability of the estate and may also lower the rate of tax applied to the remainder.
While deeds of variation can be highly effective, they must be drafted carefully. Mistakes can render the deed invalid or ineffective for tax purposes. For example, if the deed does not contain the correct statements required by HMRC, the tax advantages may be lost.
There is also the potential for disagreement between beneficiaries. If one beneficiary wishes to vary their entitlement in a way that affects the tax position of others, consent may be required. Disputes of this kind can delay probate and, in some cases, escalate into contentious probate litigation.
Finally, deeds of variation cannot be used to rewrite wills simply because someone disagrees with the testator's decisions. They are a tool for beneficiaries to redirect their own entitlement, not to override the deceased's wishes entirely.
A deed of variation is a powerful legal tool that allows beneficiaries to rearrange the distribution of an estate after death. While it cannot rewrite a will, it can redirect inheritances for reasons of fairness, tax efficiency, or family harmony.
The cost of a deed of variation varies depending on complexity, but investing in professional advice is essential. Poorly drafted variations can cause legal problems, tax complications, and probate delays. When done correctly, however, they can save families significant amounts in taxes and reduce the risk of disputes.
Because deeds of variation must be made within two years of death, and because they directly affect the probate process, it is vital to seek expert advice quickly. Executors and beneficiaries alike benefit from clarity, efficiency, and peace of mind when variations are handled properly.
At Premier Solicitors, we provide expert advice on deeds of variation, probate, and estate administration. Our experienced team can explain the options available, draft deeds of variation that comply with all legal requirements, and work alongside tax specialists to ensure the arrangement is as efficient as possible.
Whether you are an executor managing an estate or a beneficiary considering redirecting your inheritance, we can provide clear, practical guidance tailored to your circumstances. By acting promptly and with professional support, you can ensure that any variation achieves your goals while safeguarding the probate process.
Contact Premier Solicitors today for expert advice on deeds of variation, probate, and all aspects of estate planning and administration. Please call us on 01234 358 080 or visit our contact page to send an enquiry form.
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