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How Can Entitlement On Death Be Changed

Testamentary freedom – the ability to leave our estate to whomever we want to, is sacred in our society and upheld in law. There is no presumption that one should leave anything to anyone for any reason.

If you do not make a will then the rules of intestacy will govern who inherits your estate.

However, not everyone will be happy with how an estate is to be distributed, whether under a Will or through the rules of intestacy. There are circumstances where a court is prepared to override the wishes of a testator and the law does allow people the ability to challenge entitlement to an estate following death.

If there is a will, then it can be challenged on a number of grounds, such as:

a) Undue influence
b) Fraud
c) Want of knowledge and approval
d) Incapacity
e) Invalid execution

The Inheritance Act (Provisions for Family and Dependants) Act 1975 allows certain classes of people to make a claim against the estate where no reasonable financial provision has been made for them (either within a will or under the intestacy rules).

However, the above options usually involve specific evidence to be obtained, and potentially costly and time consuming litigation to be embarked on which could reduce the amount in the estate for distribution.

A much more amicable solution would be for parties to enter into a Deed of Variation.

A Deed of Variation

A Deed of Variation (sometimes known as a Deed of Family Arrangement) re-directs all/part entitlement under a will or the rules of intestacy rather than the provisions of the will/rules of intestacy themselves.

One beneficiary or all the beneficiaries can agree to give away their inheritance to someone else.

Some of the reasons why a Deed of Variation may be used include:

  • Reducing tax payable (Inheritance and Capital Gains Tax only – not Income or Stamp Duty Tax)
  • Provide for someone who has been left out
  • Resolve contentious claims amicably
  • Pass assets to the next generation
  • Move assets into a trust (which means more flexibility and protection for future family wealth)

To be valid a Deed of Variation must comply with the following statutory requirements:

  1. be made within two years of the date of death (and this cannot be extended)
  2. be in writing (a deed is usually used)
  3. be signed by all the people whose entitlement is adversely affected
  4. be clear on what is being varied and for how long and to whom
  5. not be for money or money’s worth
  6. include a statement of intent for the rewriting effect to apply for Inheritance Tax and Capital Gains Tax

Final Words

As there are strict deadlines and requirements for a Deed of Variation to be effective, appropriate advice should be sought by the interested parties early on.

Even better would be to have a comprehensive and tax efficient will in the first place to avoid the need for a Deed of Variation.

A Letter of Wishes can accompany any will to explain the provisions and minimise the likelihood of challenge and contention.

If you would like legal advice about Intestacy Rules, Dead of Variation, or on what grounds you can challenge a Will, contact our dispute resolution experts on 0330 822 3451 or request a call back online. 

Further Reading Articles by Chun Wong