Deed of Variation: Changing an Inheritance

If you have inherited money or property and want to pass it to someone else, or share it out differently from what the will says, a deed of variation is the legal tool for the job. It is a legal document which allows the beneficiaries of an estate to change the terms of the will or intestacy after the death¹. The people who receive funds or property from the will can change how the estate is distributed to reflect family circumstances and possibly save future inheritance tax².

The rule that catches most people out is the deadline. If a deed of variation is being made for inheritance tax reasons, it needs to be made within two years of the deceased's death³. Any changes must be made within two years of the date of death, and must be made by the person who is due to inherit⁴. Miss that window and the tax treatment changes.

There is a second condition that is just as important: everyone affected has to agree. All beneficiaries affected must be over the age of 18, all of them must mutually agree to the changes, none of the beneficiaries who adjust their share can be compensated for what they lose, and the variation cannot be made in return for payments from someone outside the estate³. If one person refuses, the variation cannot go ahead as planned.

What a deed of variation does to an inheritance

An instrument of variation is a legal document which allows the beneficiaries of an estate to change the terms of the will or intestacy after the death¹. In plain terms, it rewrites who gets what, after the person has died, without needing to go back and change the will itself.

The most common reasons are practical. A beneficiary may want to redirect their share to someone else in the family, perhaps to grandchildren rather than children, or to a charity. The variation allows beneficiaries to change how the estate is distributed to reflect family circumstances or possibly save future inheritance tax⁶. It can also be used to avoid disputes about inheritance, which is one of the reasons people make a will in the first place⁷.

The document is sometimes called an instrument of variation, and the two terms mean the same thing. It applies to estates being dealt with under a will or under the intestacy rules, where someone died without leaving a valid will. If you are dealing with an estate and want to understand the wider process, the guide to applying for probate in England and Wales sets out the steps, and receiving an inheritance covers what to do with money once it arrives.

A deed of variation does not change the will for the future. It only affects the estate of the person who has died. The original will still stands as the record of what that person wanted, and the variation is a separate legal act by the people who inherited.

Who can make one: every affected beneficiary, aged 18 or over

The eligibility rules are strict, and they exist to stop one person rewriting an inheritance at another's expense. All beneficiaries affected must be over the age of 18, all affected beneficiaries must mutually agree to the changes, none of the beneficiaries who adjust their share can be compensated for what they lose, and a variation cannot be made based on receiving payments from someone outside the estate³.

That last condition matters. You cannot agree to give up your share in exchange for cash from a relative who is not part of the estate. The variation has to be a genuine rearrangement of the estate itself, not a disguised purchase of someone's inheritance.

Where a will leaves gifts to people under 18, the estate has to make provision for that. When distributing an estate, at least two trustees must be named for any gifts to beneficiaries under 18⁸. Those trustees hold and manage the money until the beneficiary reaches the age at which they can receive it. For bare trusts, proceeds go to the nominated person or people when they turn 18, or 16 in Scotland⁹.

If a variation affects children or as yet unborn children, the Court must approve the variation before it is made³. That is a safeguard for people who cannot consent for themselves, and it means a straightforward family agreement is not enough on its own in those cases.

The two-year deadline from the date of death

The two-year rule is the single most important date in the process. If a deed of variation is being made for inheritance tax reasons, it needs to be made within two years of the deceased's death³. Any changes must be made within two years of the date of death, and must be made by the person who is due to inherit⁴.

The deadline runs from the date of death, not from the date probate is granted or from when the estate is valued. That distinction matters because probate itself can take time. If you are waiting for a grant before making decisions, the clock is already running. The guide to how long probate takes explains the timescales involved.

There is a related deadline in the inheritance tax rules for excepted estates. A Class F exemption applies for a period of up to 2 years from the date of death of the deceased, or to the date probate or confirmation is made, whichever is sooner for the first period¹⁰. That is a separate rule from the deed of variation deadline, but it shows how the two-year mark recurs across the inheritance tax system.

For will trusts, there is another two-year point. A trust created by a will can remain unregistered for up to two years; if it still exists once those two years are up, it must be registered with the Trust Registration Service¹¹. Again, the two-year mark is the trigger.

If the two years have passed, the opportunity to make a deed of variation with the inheritance tax treatment that goes with it has gone. Beneficiaries can still give away what they receive, but that is a different act with different tax consequences, and it may trigger other rules.

Deeds of variation and inheritance tax

The tax angle is usually why a deed of variation is considered at all. It allows beneficiaries to change how the estate is distributed to reflect family circumstances or possibly save future inheritance tax⁶. The word "possibly" is doing real work there: the outcome depends on the estate and on who the money goes to.

The mechanism is that the variation is treated, for inheritance tax purposes, as if the change had been made by the person who died. That means the estate is taxed as if the new arrangement had always been in the will. Redirecting a gift can move money out of a beneficiary's own taxable estate, or into a charity, or to someone with more allowance available.

Inheriting a property in a will is excluded from Stamp Duty Land Tax¹², so a variation that redirects property between beneficiaries does not create a stamp duty charge on that basis. That is one of the practical points that makes property variations workable.

The rules are not simple, and the tax outcome depends on individual circumstances. Tax rules depend on the type of investment and individual circumstances and may change¹³. Anyone considering a variation for tax reasons needs the figures worked out for the specific estate, and the guide to when and how to pay inheritance tax on an estate covers the wider picture. For trusts, the guide to inheritance tax and trusts explains how different trust structures are treated.

Do I need a solicitor to draw up a deed of variation?

There is no rule that says a solicitor must draw up the document, but the conditions attached to it make professional help the practical choice for most people. Every affected beneficiary has to sign, the wording has to be precise, and the tax treatment depends on the document being correct.

Where a variation affects children or unborn children, the Court must approve the variation before it is made³. That is a formal step, and it is not something a family can arrange between themselves.

There is a parallel in property law that shows how deeds work in practice. Where a property's ownership is being changed, for example by adding or removing a joint owner, a solicitor will need to amend the deeds and draw up an ownership agreement¹⁴. A deed of variation on an inheritance is a similar kind of formal document, and the same logic applies: the deed has to be right, because it changes legal rights.

If the estate is being administered by a professional, they will usually be the first point of contact. The guide to paying a professional to deal with an estate explains what executors and administrators do, and being an executor covers the duties of the person responsible for carrying out the will.

What happens if one beneficiary does not agree?

A deed of variation is a consensual document. All affected beneficiaries must mutually agree to the changes³. If one person who would lose out refuses, the variation cannot proceed as planned.

There is no mechanism to force a variation through against a beneficiary's wishes. The estate is then distributed under the original will or the intestacy rules. Anyone who wanted a different outcome would be looking at other routes, such as giving away their own share after they receive it, which is a separate act with its own tax treatment.

Where a variation is being considered as part of a wider financial arrangement, the same principle of consent appears elsewhere. In an individual voluntary arrangement, if creditors do not approve the proposal, the client is referred back to charity debt advisors to look at other options, and creditors may be asked to vary the terms of the original proposal or a variation meeting may be held¹⁵. The parallel is not exact, but it shows the general principle: a variation only works if the people affected agree to it.

If the disagreement is about the estate itself rather than a variation, the guide to dying without a will in England and Wales explains how the intestacy rules distribute an estate, and wills in Scotland covers how the rules differ north of the border.

A deed of variation on a lease is a different document

The phrase "deed of variation" is used in two completely different contexts, and mixing them up causes confusion. A deed of variation on an inheritance changes who benefits from an estate. A deed of variation on a lease changes the terms of the lease itself, and it has nothing to do with inheritance.

On a lease, the question is whether the landlord will agree to the change. You may need permission for some changes, depending on the terms of your lease⁵. The lease is the contract, and its terms govern what can be varied and on what basis.

If you make changes without permission, the consequences can be serious. You may have to change it back and you could get fined, your landlord could try to evict you for breaking your tenancy agreement, and could take legal action against you¹⁶. That is a strong reason to check the lease and get any permission in writing before work begins.

Fees are a separate question. For tenancy agreements, a landlord can charge up to £50 for the work involved in updating the agreement when a tenant asks for a change, for example adding or removing a person¹⁷. If the costs are higher, the landlord should give evidence to a tenant that any fee charged above £50 is reasonable¹⁷. The same limit appears in the official guidance for tenants: when you ask for a change to the tenancy agreement, you can be charged up to £50, or a higher amount if the work costs more¹⁸.

There is a list of fees a landlord is allowed to charge, which includes rent, a refundable tenancy deposit, a refundable holding deposit, a payment to change the tenancy, a payment when leaving without enough notice, payments towards utility bills and communication services, a fee for late payment of rent, and a fee for replacing a key or security device¹⁸. Anything outside that list is generally not permitted.

Leasehold properties have their own quirks. Where a leaseholder pays a rent in excess of £250 a year, or £1,000 in Greater London, that triggers quirks in leasehold law affecting shared ownership leases¹⁹. Planned leasehold reform legislation would retain the separate valuation methodology for low-value properties known as "section 9(1)"²⁰. These are technical points, and they are why lease variations are usually handled by a solicitor who works with leasehold property.

Where to get help

For the inheritance side, the starting point is the person administering the estate, whether that is an executor, an administrator or a professional. The guide to what to do when someone dies sets out the practical steps, and free bereavement support and helplines lists organisations that can help at a difficult time.

For the lease side, the lease itself and the landlord or managing agent are the first sources of information. If a dispute arises, the terms of the lease and the law on tenancy fees set out what can and cannot be charged.

MoneyHelper offers free, impartial guidance on money questions, and the Financial Ombudsman Service can look at complaints about financial firms. For debt and estate matters, charities such as StepChange and National Debtline provide free advice, and Age UK publishes guidance on probate and legal issues⁸.