English law contains a quiet oddity: for two years after someone dies, the people who inherit can rearrange who gets what, and for inheritance tax purposes the law will read the change back into the will, as if the person who died had written it that way. The instrument that does this is a deed of variation, and it is one of the most useful tools in estate administration.
What a deed of variation is
A deed of variation is a written document in which a beneficiary redirects some or all of their inheritance to someone else. It works on gifts under a will and on entitlements under the intestacy rules alike. Crucially, only your own share can be redirected: a variation never takes anything from a beneficiary who has not signed it.
Why the two-year window matters
Without the special rules, redirecting an inheritance is simply you making a gift, with your own tax consequences: potentially seven years of inheritance tax exposure on the amount. Under section 142 of the Inheritance Tax Act 1984 and section 62 of the Taxation of Chargeable Gains Act 1992, a variation made within two years of the death, with the right election written into the deed, is instead treated as made by the person who died. The gift skips your estate entirely for IHT and capital gains purposes.
What people use them for
- Skipping a generation: parents who do not need an inheritance pass it straight to their children, keeping it out of their own taxable estate
- Reducing the tax bill: redirecting enough to charity can qualify the estate for the reduced 36 per cent inheritance tax rate, and charitable gifts are themselves tax-free
- Providing for someone the will missed: a new grandchild, an unmarried partner, a carer, often heading off a formal claim against the estate
- Evening things up: correcting an old will that left unequal shares no one is happy with
- Fixing structure: redirecting into a trust, or tidying a home’s ownership after death
The requirements, precisely
- In writing, signed by every beneficiary whose entitlement is reduced (executors sign too if the variation increases the tax bill)
- Within two years of the date of death, with no extensions
- Containing an express statement that section 142 IHTA 1984 and, if wanted, section 62 TCGA 1992 are to apply
- Given freely: a beneficiary must not be paid or compensated from outside the estate for agreeing, or the tax treatment collapses
- Each asset can only be varied once; there is no second bite
Beneficiaries must be adults with capacity to sign away their own share. A variation that would reduce a child’s inheritance needs court approval, which in practice makes such variations rare.
A repair tool, not a plan
Deeds of variation exist because wills go stale and estates surprise people. They are the repair, at the cost of legal fees, family negotiation and a hard deadline, for outcomes a current will would have handled quietly. If your own will is more than a few years old, or life has moved since you signed it, updating it now costs a fraction of what your family would spend fixing it later. Willful keeps that cheap and reviewed: a £49 codicil for small changes, a fresh solicitor-reviewed will when the structure needs to change.