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Deed of Variation: How to Change a Will After Death

· 24 min

Note: The following scenario is fictional and used for illustration.

Emma inherited £450,000 from her father's estate, but her brother Michael—who had cared for their father full-time during his final two years—received nothing because the will was written before Michael moved home to become a carer. Emma knew this wasn't what her father would have wanted if he'd known Michael would sacrifice his career.

Within six weeks of probate, Emma and her siblings signed a deed of variation redirecting £150,000 to Michael and creating a discretionary trust with the nil-rate band to save £52,000 in inheritance tax. The variation took the estate from £180,000 IHT liability to £128,000—and gave Michael the recognition he deserved.

According to HMRC guidance, a deed of variation must be made within 2 years of death to be effective for inheritance tax purposes. Financial advisers report using deeds of variation with more clients than ever following recent inheritance tax changes (MoneyWeek, 2024).

This flexible legal tool allows families to correct unfair distributions, adapt to changed circumstances, or optimize their tax position after someone dies.

This article explains exactly what a deed of variation is, when it's appropriate, the legal requirements, costs, and step-by-step process for changing a will after death—whether for tax planning, correcting unfair distributions, or adapting to changed circumstances.

Table of Contents

What Is a Deed of Variation?

A deed of variation is a legal document allowing beneficiaries to change how an estate is distributed after death. It doesn't change the will itself—instead, it changes how the estate is administered and taxed.

Alternative names include "instrument of variation," "deed of family arrangement," or "deed of assignment." These terms all refer to the same legal mechanism.

The legal basis comes from Section 142 of the Inheritance Tax Act 1984. Under this legislation, when beneficiaries make a variation within 2 years of death, HMRC treats it as if the deceased had made the changes themselves.

This retrospective treatment makes deeds powerful for tax planning. Instead of being treated as a gift from the beneficiary, the variation is treated as part of the deceased's estate distribution.

Sarah inherited £400,000 from her mother's estate but redirected £325,000 to a discretionary trust to save £130,000 in inheritance tax on her own eventual death. Because she made the deed within 2 years, the trust is treated as if her mother had created it.

David received his father's family home worth £350,000 but varied the will so his sister—who had been accidentally omitted—received a 50% share. The variation corrected an oversight without complex legal proceedings.

In cases where an unmarried partner receives nothing under intestacy rules, siblings sometimes agree to vary the estate distribution to give the surviving partner the home. This addresses a common injustice in intestacy law.

HMRC guidance confirms that all beneficiaries who will lose out under the deed must sign it. The variation must be made within 2 years of the testator's death for tax effectiveness.

Why Would You Need a Deed of Variation?

Deeds of variation serve three main purposes: tax planning, family fairness, and practical estate management.

Tax planning is the most common reason. The nil-rate band has been frozen at £325,000 since 2009 and will remain fixed until 2030. When someone dies leaving everything to their spouse, this nil-rate band goes unused—but a deed can capture it.

Nearly one in 10 estates liable for inheritance tax paid over £500,000 in 2021/22, according to a Rathbones Freedom of Information request, highlighting the significant sums at stake in tax planning.

James and Eleanor's situation illustrates this. Eleanor died leaving her £650,000 estate entirely to James (spouse exemption means £0 IHT). James was 82 and already wealthy.

They varied £325,000 into a discretionary trust for their children. This used Eleanor's nil-rate band immediately.

When James died three years later with a £1.2 million estate, the family saved £130,000 in inheritance tax. Eleanor's nil-rate band had been preserved through the variation rather than wasted through the spouse exemption.

Charitable giving offers another tax advantage. Giving 10% of the estate to charity reduces the IHT rate from 40% to 36%.

Consider an estate worth £1,000,000 with £675,000 taxable after the nil-rate band. The IHT bill would be £270,000 at 40%.

Beneficiaries agreed to vary £100,000 (10% of the estate) to a cancer charity. The new IHT bill was £216,000 at the reduced 36% rate—saving £54,000. The charity received £100,000. The net cost to beneficiaries was only £46,000, and they honored charitable wishes the deceased had expressed during life.

Family fairness drives many variations. Olivia's will left £500,000 equally among three adult children (£166,667 each).

Her eldest daughter Sophie was a millionaire. Her middle son Ben was financially comfortable. Her youngest daughter Grace was a single mother struggling financially.

Sophie and Ben agreed to a deed of variation giving their shares to Grace. Grace received the full £500,000. Her life was transformed, and her siblings felt good about helping.

Practical reasons include beneficiaries who don't need the inheritance and prefer it to pass to their children, or elderly parents receiving buy-to-let properties they cannot manage. Deeds simplify administration while achieving the right outcome.

Section 142 of the Inheritance Tax Act 1984 sets out strict requirements for valid deeds of variation.

The timing requirement is absolute: within 2 years of death. This deadline is strict for tax effectiveness. After 2 years, variations can still be made for family purposes but lose all inheritance tax and capital gains tax benefits.

The deed must be in writing. HMRC guidance confirms it doesn't have to be a formal deed—a signed letter or document works if it contains all necessary elements.

Unanimous consent from all affected beneficiaries is essential. "Affected" means anyone whose inheritance reduces because of the variation. Even one refusal kills the entire deed.

The statement of intent is critical. The deed must include specific wording: "This deed is made for the purposes of Section 142 of the Inheritance Tax Act 1984." Without this statement, the variation is treated as a gift from the beneficiary rather than from the deceased.

For capital gains tax purposes, you also need a Section 62(6) statement if assets have increased in value since death.

The consideration rule prohibits payment for agreement. Section 142(3) states variations cannot be made "for any consideration in money or money's worth." The only exception is rearranging assets within the same estate.

Capacity requirements mean all signatories must have mental capacity. Minors under 18 cannot sign—courts cannot approve deeds on a minor's behalf.

Marcus, aged 17, inherited £100,000. His siblings wanted to vary it to their mother for tax planning. They had to wait until Marcus turned 18. Any variation signed before his birthday would be invalid.

Three adult beneficiaries wanted to vary an estate for tax purposes. The fourth beneficiary, who would lose £50,000, refused to sign. The variation failed. The original will stood.

Five adult beneficiaries all signed within 18 months of death, including the required Section 142 statement. The deed was legally effective for tax purposes.

What deeds cannot do is equally important. They cannot change executor appointments, guardianship provisions, or funeral wishes. They cannot override court orders or binding contracts. They cannot be made if any affected beneficiary lacks capacity or is under 18.

How Deeds of Variation Affect Inheritance Tax

Deeds of variation receive special tax treatment that makes them powerful planning tools.

The retrospective treatment is the key. HMRC treats the variation as if the deceased made it. This means it's not a potentially exempt transfer from the beneficiary—it's part of the deceased's estate distribution.

Using the nil-rate band is the most common strategy. The nil-rate band is fixed at £325,000 until 2030. When estates pass entirely to spouses, this allowance goes unused.

The residence nil-rate band adds £175,000 if the family home passes to direct descendants. Deeds can create or preserve this additional relief.

Transferable nil-rate bands allow surviving spouses to claim any unused nil-rate band from their deceased spouse. Careful deed planning preserves both spouses' allowances.

Let's look at detailed calculations.

Before Deed of Variation:

  • Estate value: £1,000,000
  • All to surviving spouse (spouse exemption)
  • IHT on first death: £0
  • Survivor's own estate: £500,000
  • Combined estate when survivor dies: £1,500,000
  • Nil-rate band: £325,000
  • Taxable amount: £1,175,000
  • IHT at 40%: £470,000

After Deed of Variation:

  • Vary £325,000 into discretionary trust for children
  • Remaining £675,000 to spouse (spouse exemption)
  • IHT on first death: £0 (nil-rate band used by trust)
  • Survivor's own estate: £500,000
  • Assets received from spouse: £675,000
  • Combined: £1,175,000
  • Survivor's nil-rate band: £325,000
  • Deceased's transferable nil-rate band: £0 (already used)
  • Taxable amount: £850,000
  • IHT at 40%: £340,000
  • Tax saved: £130,000

When the variation increases tax, you must notify HMRC within 6 months using form IOV2. When it decreases tax, notification isn't legally required but advisable for accurate records.

The 10% charitable giving rule offers an alternative strategy. Estates giving 10% to charity pay IHT at 36% instead of 40%. This can be achieved through a deed of variation if beneficiaries agree.

The Deed of Variation Process: Step-by-Step

Making a deed of variation follows a structured process.

Step 1: Determine if variation is needed (within 2-year window)

Review the will or intestacy distribution carefully. Identify potential tax-saving opportunities or unfair outcomes.

Calculate potential IHT savings by modeling scenarios with and without the variation. Confirm all affected beneficiaries are adults with mental capacity.

Step 2: Get all beneficiaries on board

Explain the benefits clearly to all parties—whether tax savings or family fairness. Address concerns openly, particularly if beneficiaries feel guilty about redirecting inheritance.

Obtain agreement in principle before incurring drafting costs. Remember that one refusal prevents the entire variation.

Step 3: Calculate the numbers

Work with a solicitor or tax advisor to model precise scenarios. Calculate IHT with and without the variation to confirm benefits.

Ensure the variation achieves your intended outcome. Consider capital gains tax implications if assets have increased in value since death.

Step 4: Draft the deed

Use a solicitor for anything except the simplest variations. The deed must include specific elements: the deceased's name and date of death, details of the original will or intestacy distribution, exact changes being made, and all affected beneficiaries.

Include the Section 142 statement: "This deed is made for the purposes of Section 142 of the Inheritance Tax Act 1984 and Section 62(6) of the Taxation of Chargeable Gains Act 1992."

Add date and signature blocks for all affected beneficiaries. Include witness signature lines—two independent witnesses, as with a will.

Step 5: Execute the deed

All beneficiaries must sign in the presence of witnesses. Witnesses must be independent—not beneficiaries or spouses of beneficiaries.

Keep the original deed safely. Provide copies to executors and solicitors handling the estate.

Step 6: Notify HMRC (if required)

If the variation increases tax, you must notify HMRC within 6 months using form IOV2. Include a copy of the deed and an explanation of the changes.

Even if the variation decreases tax, notification helps ensure proper records and reduces future queries.

Step 7: Update estate administration

Executors must distribute the estate according to the variation, not the original will. Update estate accounts to reflect the changes.

Ensure all parties receive correct assets and amounts. Keep the deed with probate records permanently.

Most deeds take 2-6 months from initial decision to final execution. Solicitor drafting typically takes 2-4 weeks once instructions are received. HMRC processing of IOV2 notifications takes 4-8 weeks.

How Much Does a Deed of Variation Cost?

Solicitor-drafted deeds typically cost £600-£1,200 plus VAT. Farewill's partner law firm charges £600 plus VAT for deed of variation services, which represents the lower end of the market for straightforward cases.

Simple deeds redirecting cash gifts cost £600-£800. The lower end applies when a single beneficiary redirects money to one other person with no trusts involved.

Complex deeds involving trusts, multiple beneficiaries, or detailed tax planning cost £900-£1,200 or more. Additional hourly charges may apply if extensive negotiation is needed among beneficiaries.

DIY templates from online legal services cost £50-£150, based on typical pricing from legal document providers such as Rocket Lawyer and LawDepot. These work only for very simple variations. The risk of errors that invalidate the deed or create unintended tax consequences makes DIY dangerous except in the simplest cases.

Tax advisor fees add £500-£1,500 if complex IHT planning is involved, according to typical rates from chartered tax advisers and IHT specialists. This separate charge covers modeling scenarios and calculating tax savings.

Executor time is often included in estate administration with no separate charge.

The cost-benefit analysis is straightforward. A deed costing £900 that saves £130,000 in IHT represents a return on investment of 14,344%.

A deed costing £750 that corrects an unfair distribution worth £80,000 to a disadvantaged beneficiary provides priceless family harmony.

The key is matching the service level to the situation's complexity. Using cheap templates for complex situations is penny wise and pound foolish. Not getting independent legal advice when beneficiaries have conflicting interests creates risk.

Common Mistakes to Avoid with Deeds of Variation

Understanding what can go wrong helps you avoid costly errors.

Mistake 1: Missing the 2-year deadline

The deadline is calculated from the date of death. If someone died on 15 March 2023, the deadline is 14 March 2025—exactly 2 years later.

Deeds can still be made after 2 years for family purposes, but they lose all tax effectiveness. One family missed their deadline by 3 weeks and lost an £85,000 IHT saving. Though they sued their solicitor for negligence, the tax saving was never recovered.

Mistake 2: Not getting all affected beneficiaries to sign

Even one missing signature invalidates the deed. "Affected" means anyone whose inheritance reduces, not just those named in the variation.

Varying the residuary estate affects all residuary beneficiaries, even if only one is mentioned in the deed document.

Mistake 3: Forgetting the Section 142 statement

Without the specific Section 142 statement, the variation doesn't work for tax purposes. It's treated as a gift from the beneficiary, creating potential IHT liability on the beneficiary's later death.

One deed drafted without this statement led HMRC to treat it as a potentially exempt transfer from the beneficiary. When the beneficiary died 5 years later, it created a £150,000 IHT liability the family hadn't anticipated.

Mistake 4: Trying to vary when a beneficiary is under 18

Minors cannot give legal consent to deeds of variation. Courts cannot approve on their behalf—this isn't like settling a minor's claim.

Wait until all affected beneficiaries turn 18. Any variation attempted with a minor's signature is invalid.

Mistake 5: Not considering capital gains tax

Deeds work retrospectively for IHT but not automatically for income tax. If assets have increased in value since death, capital gains tax may apply unless you include a Section 62(6) Taxation of Chargeable Gains Act 1992 statement.

The deceased bought shares for £100,000, now worth £200,000. A variation to a different beneficiary creates a £100,000 taxable gain unless the Section 62(6) statement is included.

Mistake 6: Making a variation for payment

Paying a beneficiary to agree invalidates the deed for tax purposes. The only exception is rearranging assets within the same estate—swapping cash for property, for example.

Mistake 7: Not notifying HMRC when required

If the variation increases tax, you must notify HMRC within 6 months. Failure can result in penalties.

Send form IOV2 with a copy of the deed to HMRC Inheritance Tax.

Mistake 8: Assuming executors can vary the will

Only beneficiaries can make variations. Executors must distribute according to the variation once made, but they cannot create it.

If a beneficiary died before the variation was made, their executor can sign within 2 years of the original death.

Deeds of Variation vs. Disclaimers: What's the Difference?

Beneficiaries sometimes confuse deeds of variation with disclaimers. They're different tools for different situations.

A disclaimer is refusing or rejecting an inheritance entirely. The beneficiary steps aside, and the inheritance passes to the next person entitled.

Under intestacy, a disclaimer passes inheritance to the next person in line according to intestacy rules. Under a will, it passes to any substitute beneficiary named, or otherwise to the residuary estate.

The key differences matter:

Feature Deed of Variation Disclaimer
What it does Redirects inheritance to person of your choice Refuses inheritance; passes to next entitled person
Control over destination You decide where it goes You don't control who receives it
All beneficiaries must agree Yes (if they're affected) No (individual decision)
Timing Within 2 years (for tax) Anytime, but before accepting benefits
Tax treatment As if deceased gave it As if you never inherited
Partial option Yes (vary part, keep part) No (all or nothing)

Use a disclaimer when you genuinely don't want the inheritance and you're happy with who will receive it instead. It's a simple rejection without needing to specify a recipient.

Charlotte inherited £200,000 from her aunt's estate but was financially secure. The will stated: "if Charlotte predeceases me, her share goes to her daughter Emily."

Charlotte disclaimed her inheritance. Emily received the £200,000 automatically. Simple and effective.

Use a deed of variation when you want to control who receives the inheritance, when multiple beneficiaries need to coordinate changes, or when complex tax planning is involved.

Charlotte inherited £200,000 and wanted it split between her two children, Emily and Oliver. The will only named Emily as a substitute.

Charlotte used a deed of variation to split the inheritance: £100,000 to Emily, £100,000 to Oliver. This gave her more control than a disclaimer.

One important limitation: once you accept any benefit from an inheritance—spending money or taking possession of assets—you cannot disclaim. The opportunity is lost permanently.

Do You Need Professional Help with a Deed of Variation?

Not all deeds require professional help, but most do.

When you probably need a solicitor:

Estates exceeding the nil-rate band (£325,000) where IHT is payable require professional advice. The tax stakes are too high for errors.

Creating or modifying trusts—discretionary trusts, life interest trusts—demands specialist knowledge. Trust law is complex and mistakes create long-term problems.

Variations affecting more than three beneficiaries need professional coordination. Assets including business interests, agricultural property, or foreign property involve specialized rules.

Capital gains tax implications when assets have increased significantly in value require expert calculation. Beneficiaries with conflicting interests need independent advice to protect everyone.

Minor beneficiaries, even if you're waiting until they turn 18, often involve complex planning. Variations creating new trusts require registration with HMRC's Trust Registration Service.

Potential claims under the Inheritance (Provision for Family and Dependants) Act 1975 add another layer of complexity.

When you might manage with a template or online service:

Simple variations where one beneficiary redirects a cash gift to another can work with templates. If all beneficiaries get along and agree on changes, complexity is reduced.

Estates below the IHT threshold, with no trusts involved and no capital gains tax issues, present lower risk. All beneficiaries must be adults with capacity.

Questions to ask yourself:

"Could a mistake cost my family more than the solicitor's fee?" If yes, get a solicitor.

"Can I explain exactly what the deed needs to say in one sentence?" If no, get a solicitor.

"Do all beneficiaries trust each other and agree on the changes?" If no, get a solicitor. Independent advice protects everyone.

"Does the variation create or modify a trust?" If yes, get a solicitor. Trust law is too complex for DIY.

"Am I close to the 2-year deadline?" If yes, get a solicitor. You cannot afford errors that delay execution.

The cost-benefit framing is clear. A solicitor fee of £900 against IHT at risk of £130,000 provides peace of mind that it's done correctly.

A DIY template costs £100, but the risk of error is high. The potential cost of that error is £130,000 or more. The savings of £800 are rarely worth the risk.

Red flags that you're in over your head:

You don't understand how the variation affects IHT. Beneficiaries are asking technical questions you can't answer.

You're not sure whether Section 142 or Section 62(6) statements are needed. You've read the HMRC manuals and still don't understand.

Beneficiaries want you to explain capital gains tax implications.

Finding the right solicitor:

Look for specialists in wills, probate, and inheritance tax. Ask about experience with deeds of variation specifically.

Request a fixed-fee quote rather than hourly billing. Check the Law Society's Find a Solicitor directory.

Get recommendations from your executor or financial advisor.

Frequently Asked Questions

Q: Can you change a will after someone dies?

A: Yes, beneficiaries can change how an estate is distributed after death using a deed of variation (also called an instrument of variation). All affected beneficiaries must agree, and the deed must be made within 2 years of death to be effective for inheritance tax and capital gains tax purposes. The variation doesn't change the will itself, but changes how the estate is administered and taxed.

Q: How long do you have to do a deed of variation?

A: You must make a deed of variation within 2 years of the deceased's death for it to be effective for tax purposes. The variation can be made before or after probate is granted, and even after the estate has been distributed, but the 2-year deadline is strict for tax benefits. After 2 years, you can still make a variation for family purposes, but it won't have any inheritance tax or capital gains tax advantages.

Q: Do all beneficiaries have to agree to a deed of variation?

A: Yes, all beneficiaries who will lose out or be affected by the changes must sign the deed of variation. If even one affected beneficiary refuses, the variation cannot proceed. Beneficiaries under 18 cannot legally agree to a deed of variation, so you must wait until all affected parties reach adulthood. Courts cannot approve deeds on behalf of minors.

Q: How much does a deed of variation cost in the UK?

A: A solicitor-drafted deed of variation typically costs £600-£1,200 plus VAT, depending on complexity. Simple deeds redirecting cash gifts between family members cost less (£600-£800), while complex arrangements involving trusts or multiple beneficiaries cost more (£900-£1,200+). The cost is usually justified if the deed saves significant inheritance tax—potentially tens or hundreds of thousands of pounds.

Q: Does HMRC need to be notified about a deed of variation?

A: You must send a copy of the deed to HMRC within 6 months if it results in more inheritance tax being payable, using form IOV2. Even if no additional tax is due, the deed must include a statement that you intend it to apply for tax purposes under Section 142 of the Inheritance Tax Act 1984. If the variation reduces tax, there's no legal obligation to notify HMRC, but it's advisable for proper record-keeping.

Q: Can a deed of variation reduce inheritance tax?

A: Yes, deeds of variation are commonly used to reduce inheritance tax. The most popular strategy is redirecting up to £325,000 into a discretionary trust to use the deceased's nil-rate band, which can save £130,000 in tax on the surviving spouse's later death. Other strategies include giving 10% of the estate to charity (reducing the IHT rate from 40% to 36%) or skipping a generation to avoid double taxation.

Q: What happens if one beneficiary refuses to sign a deed of variation?

A: If an affected beneficiary refuses to sign, the deed of variation cannot proceed. The original will or intestacy rules remain in force, and the estate is distributed exactly as originally determined. This is why deeds work best when all family members understand the benefits (tax savings or fairness) and agree on the changes before drafting begins. One dissenting beneficiary has veto power over the entire variation.

Conclusion

Key takeaways:

  • Deeds of variation allow beneficiaries to legally change how an estate is distributed after death—either for tax planning or to correct unfair outcomes
  • To be effective for inheritance tax, the deed must be signed by all affected beneficiaries within 2 years of death and include a Section 142 statement
  • Common uses include maximizing the deceased's nil-rate band (£325,000), creating discretionary trusts, providing for omitted family members, or donating to charity to reduce the IHT rate from 40% to 36%
  • Solicitor costs (£600-£1,200) are typically justified by IHT savings of tens or hundreds of thousands of pounds, and professional advice prevents costly mistakes
  • Not all situations need a deed of variation—disclaimers are simpler if you just want to refuse inheritance and don't need to control who receives it

Discovering that a will doesn't reflect current family circumstances or wastes valuable tax allowances can be distressing, but it's not the final word. A properly executed deed of variation gives families a second chance to get things right—honoring the deceased's likely wishes, treating everyone fairly, and minimizing the tax burden on those left behind.

The 2-year window is generous enough to make thoughtful decisions, but short enough to require action rather than endless deliberation.

Need Help with Your Will?

Understanding how deeds of variation work highlights the importance of keeping your own will up-to-date with current circumstances and tax law. The most effective estate planning happens during your lifetime—when you control the decisions, can update your will as life changes, and leave your family clear instructions that won't need post-death corrections.

Create your will with confidence using WUHLD's guided platform. For just £99.99, you'll get your complete will (legally binding when properly executed and witnessed) plus three expert guides. Preview your will free before paying anything—no credit card required.

Legal Disclaimer: This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.

Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.

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