Occasionally, a
decedent's Will is void or out-of-date because it was not amended to take into
account their evolving circumstances at the time of death. Alternatively, there
might not be a will at all, in which case the Intestacy Rules would not have
allowed the deceased person's assets to be distributed as they would have
liked.
A beneficiary
may elect not to receive everything to which they are entitled in order to
transfer some or all of what they are entitled to others they consider are more
deserving or to make sure that everything is more in accordance with the wishes
of the deceased individual.
There may be
benefits for Inheritance Tax and Capital Gains Tax associated with making
different modifications to the circumstances emanating from the Will or
intestacy.
When is the
need for a Deed of Variation necessary?
Any adult with
mental capacity is eligible to inherit from a deceased person's estate and can
give their inheritance to whoever they choose. By filing what is known as a deed
of variation will, the law allows the gift to be viewed as
though it was made by the deceased individual straight from his estate slightly
than the planned recipient's.
To qualify for
the advantageous tax status that the modified inheritance may bring about, a
Deed of Variation is needed. This allows the IHT and CGT positions to be
"read back" until the point of death as long as certain protocols are
followed. If someone is affected by the Forfeiture Rules, they are not eligible
to choose an alternate receiver, and they cannot inherit. The inheritance
reverts to the estate and is distributed in line with the terms of the will or
testament, just as if the intended beneficiary had died before the deceased
individual.