Changing a Will after someone’s died: Surely that’s not possible?
The correct answer to this question is “no, of course it isn’t possible!”. However, whilst it is not possible to change a Will after someone has died, that is not necessarily the end of the road.
When someone creates a Will, it is personal to them.
Only they can instruct any changes or instruct its destruction and replacement. However, as soon as an individual dies, the Will can no longer be changed.
There is, however, a mechanism where the beneficiaries to an estate, whether there is a Will or not, can decide to reject or redirect their interest in the deceased’s estate. To do this, they need to enter into a Deed of Variation.
What is a Deed of Variation?
A Deed of Variation is a formal document entered into by the beneficiaries who wish to change the distribution of their entitlement in the estate. One or more beneficiaries can decide to re-direct, revoke or reduce their share in an estate by entering into a Deed of Variation.
To be effective, there are some rules that must be followed. The Deed of Variation must:
- Clearly identify the parts of the estate to which it relates;
- Identify who is to benefit;
- Be signed by all beneficiaries involved in the redistribution;
- Include a statement that the variation is to be effective for Inheritance Tax (IHT) and Capital Gains Tax (CGT) purposes;
- Contain a statement that it is effective from the date or death; and
- Be created within two years of the death of the deceased;
You must ensure the Deed of Variation contains all these elements, otherwise it will be ineffective.
In what circumstances would you use a Deed of Variation?
There are a variety of circumstances where a Deed of Variation might be the best option. The following are some examples of when a Deed of Variation can be used.
- To help with Inheritance Tax (IHT) issues
- When someone dies and their estate is more than £325,000, the balance over that figure attracts IHT in most circumstances. The current rate of IHT is 40% of the balance above £325,000.
However, when an estate makes a gift to a charity, the amount or value of the gift is free of inheritance tax. This is an effective way in which the value of the estate can be reduced to limit exposure to IHT.
In addition, if an estate donates 10% or more of its value to charity, the rate of IHT payable will reduce from 40% to 36%. This can mean a significant saving where there is a large estate faced with a large IHT bill.
Where there is no provision in a Will to donate to charity, the beneficiaries may decide to alter the distribution of the estate and make a donation to charity which would then lead to an IHT saving.
Making changes to the amounts shared amongst beneficiaries
There may be circumstances where the beneficiaries decide to change the shares directed by the Will or in an intestate estate. For instance, the beneficiaries might consider that an even distribution of the estate should be altered because one of them might be in more need of a higher share than the rest. They might decide to make the distribution to favour the beneficiary they believe is more deserving of a higher share in the estate.
On the other hand, the Will of the deceased might direct that the estate be shared amongst the beneficiaries in uneven amounts. The beneficiaries, however, might agree that the estate should be shared evenly amongst them and can enter into a Deed of Variation to change the distribution of the estate to reflect this.
Sharing the estate with new beneficiaries
There may be circumstances, where the beneficiaries of an estate may decide to change the distribution to include someone else. This may happen in an intestate estate where someone who has no entitlement under the law of succession is invited to participate in the distribution of the estate. Where the deceased left a Will, the beneficiaries in terms of the Will, may decide to share the estate with someone else. This is not unusual where stepchildren might have been excluded from a Will or where the deceased had an unmarried partner whom the beneficiaries wish to share the estate with them.
Finally, each beneficiary can act with autonomy. They do not need the consent or concurrence of the other beneficiaries. However, the beneficiary can only make decisions in respect of their own share in the estate and not the shares held by others.
Hastings Legal have many years of experience advising clients on Wills and Estates. If you wish to explore the rearrangement or redistribution of an estate, please contact us.
© Brian O’Neill 2023
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