Deed of Variation — Advantages and Disadvantages
A deed of variation can be a powerful post-death tax planning tool — but it has strict requirements and significant disadvantages. This guide explains both sides.
Advantages of a Deed of Variation
When used correctly and within the time limit, a deed of variation can achieve significant benefits.
Reduce inheritance tax
Redirect an inheritance to a charity or the next generation, potentially saving 40% IHT on the redirected amount.
Benefit family members not in the will
Redirect an inheritance to a family member who was overlooked or not included in the will.
Correct an oversight
Where the will does not reflect the deceased's true intentions, a deed of variation can correct the position.
Protect means-tested benefits
Redirect an inheritance to a trust or another family member to protect a beneficiary's entitlement to means-tested benefits.
Disadvantages and Risks
These are the key pitfalls to be aware of before proceeding with a deed of variation.
Strict two-year time limit
CriticalA deed of variation must be executed within two years of the date of death to be effective for inheritance tax and capital gains tax purposes. Miss this deadline and the tax advantages are lost permanently.
All affected beneficiaries must agree
CriticalEvery beneficiary who is giving up or redirecting their inheritance must consent to and sign the deed. If any beneficiary refuses, the variation cannot proceed — or can only proceed in respect of the consenting beneficiaries.
No payment can be made
CriticalThe variation must be made without any payment or other consideration passing between the parties. If money changes hands in connection with the variation, the tax advantages are lost.
Cannot be used to increase your own inheritance
ImportantA deed of variation can only redirect an inheritance — it cannot be used to give yourself more than the will entitles you to. Other beneficiaries cannot be forced to give up their inheritance.
HMRC notification required
ImportantWhere the variation affects the inheritance tax position of the estate, HMRC must be notified within six months of the deed being executed. Failure to notify can result in the tax advantages being lost.
Does not work for all assets
ImportantA deed of variation only affects assets that pass under the will or intestacy rules. It cannot redirect assets that pass outside the estate — such as jointly owned property passing by survivorship, pension death benefits, or life insurance policies in trust.
Potential impact on the redirecting beneficiary
NoteRedirecting an inheritance may have tax implications for the beneficiary who is giving up their inheritance — for example, if they are redirecting to a trust, there may be entry charges. We always advise on the full tax implications before a deed is executed.
Act Within Two Years — This Is a Hard Deadline
The two-year time limit is the most important constraint on a deed of variation. There is no discretion to extend it. If you are considering a deed of variation, take advice as soon as possible after the death — do not wait until the deadline is approaching.
Speak to our deed of variation solicitors →Frequently Asked Questions
What are the disadvantages of a deed of variation?
The main disadvantages are: (1) a strict two-year time limit from the date of death; (2) all affected beneficiaries must agree — one refusal can block the variation; (3) no payment can be made in connection with the variation or the tax advantages are lost; (4) it cannot redirect assets that pass outside the estate (jointly owned property, pension death benefits, life insurance in trust); (5) HMRC must be notified within six months where the variation affects the inheritance tax position.
Can a will be changed after death?
The will itself cannot be changed after the testator has died. However, the beneficiaries of an estate can collectively agree to redirect their inheritances using a deed of variation — which is treated for tax purposes as if the deceased had made the gift themselves. This must be done within two years of the date of death and requires the consent of all affected beneficiaries.
Can a will be altered after death?
No — the will cannot be altered after the testator has died. The will is a fixed document. What can be done is a deed of variation — a separate legal document signed by the beneficiaries that redirects all or part of their inheritances. This is not the same as altering the will, but it achieves a similar practical result.
Can an executor change a will?
No — an executor has no power to change a will after the testator has died. The executor's role is to administer the estate in accordance with the will as written. Only the beneficiaries can agree to redirect their inheritances using a deed of variation — and this requires the consent of all affected beneficiaries, not just the executor.
What is the two-year time limit for a deed of variation?
A deed of variation must be executed within two years of the date of death to be effective for inheritance tax and capital gains tax purposes. This is a strict statutory deadline — there is no discretion to extend it. If the two-year period has passed, the variation can still be made, but it will not have the tax advantages of a deed of variation made within the time limit.
Can a deed of variation be used where there is no will?
Yes — a deed of variation can be used to redirect an inheritance that arises under the intestacy rules (where there is no will) as well as under a will. The same two-year time limit and other requirements apply.
Does a deed of variation affect means-tested benefits?
Potentially yes — if a beneficiary redirects their inheritance using a deed of variation, this may affect their entitlement to means-tested benefits. However, if the variation is made within two years of the death, it is treated as if the deceased had made the gift — which means the beneficiary is treated as never having inherited. We advise on the benefits implications of any proposed variation.
How much does a deed of variation cost?
The cost of a deed of variation depends on its complexity — particularly whether HMRC notification is required and the number of beneficiaries involved. We confirm costs in writing before any work begins. Contact us on 01244 757352 for a no-obligation quote.
Can a deed of variation be used to redirect an inheritance to charity?
Yes — redirecting an inheritance to charity using a deed of variation is one of the most tax-efficient uses of this tool. The redirected amount is treated as a charitable legacy made by the deceased, which is exempt from IHT. If the charitable legacy brings the total charitable giving to 10% or more of the net estate, the IHT rate on the remainder is reduced from 40% to 36%. We can advise on how to structure a charitable deed of variation.
Can a deed of variation be reversed?
No — once a deed of variation has been executed and the two-year period has passed, it generally cannot be reversed. Before the two-year period expires, it may be possible to execute a further deed of variation to undo the first, but this is complex and requires careful advice. This is why it is so important to take proper legal advice before executing a deed of variation.
Do all beneficiaries need to sign a deed of variation?
Only the beneficiaries who are giving up or redirecting their inheritance need to sign the deed. Beneficiaries who are receiving a redirected inheritance do not need to sign (though they should be notified). If any beneficiary who is giving up their inheritance refuses to sign, the variation cannot proceed in respect of their share — though it may still be possible to vary the shares of the consenting beneficiaries.
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Considering a Deed of Variation?
We advise on whether a deed of variation is appropriate for your circumstances and handle the full process — including HMRC notification. No obligation to proceed after an initial discussion.