As strange as it may seem it is possible, in certain circumstances, to change the terms of a person’s Will, after they have died.
It is also possible, if a person has died before they have had the opportunity to make a Will, to put in place a notional Will on their behalf, thus replacing the Intestacy Rules which say what happens to a person’s assets if they die without a Will.
What are the circumstances in which a Will can be changed
Any changes to a Will must be made within 2 years of the person’s death. Any of the beneficiaries of the Will who would be adversely affected have to agree to the changes.
For example, the sole beneficiary under the terms of a Will may already have sufficient assets of their own and receiving their inheritance could mean that they have a more substantial inheritance tax liability on their own death. They may therefore wish to re-direct the assets to, for example, their children.
It is not only the sole beneficiary of an Estate that can do this. If someone is one of a number of beneficiaries, perhaps they have just been left a set sum of money and the remainder of the Estate goes elsewhere, they can change just this one provision of the Will to say who should have the legacy instead.
There are certain circumstances where changes cannot be made, for example if children under 18 would be affected or if an Attorney wishes to vary the provisions in respect of someone who no longer has capacity, in which case Court approval may be required
What if the person died without a Will
If a person dies without a Will the Intestacy Rules state who will inherit their assets. This is not always who you would expect, or indeed want, to benefit following death.
In this situation, if the people entitled to the assets under the Intestacy Rules do not wish to inherit, they can also change the way in which the Estate is distributed. Again anyone who would be adversely affected has to agree to the changes.
How are the changes made?
Although not a strict legal requirement that any changes are recorded in a formal legal document, in either of the above cases it would be normal for a Deed of Variation to be signed. The beneficiary changing their entitlement would sign the Deed, as would the Executors or Administrators of the Estate.
If the changes affect any tax that is payable following the death, then the Deed has to be lodged with HMRC.
The benefit to executing a Deed of Variation is that it is possible to redirect the legacy and say who should receive it instead of the original beneficiary. If the gift is simply disclaimed, then it falls in to the residue of the Estate and passes, either in accordance with the remainder of the terms of the Will, or in accordance with the Intestacy Rules.
Another advantage is that, for most purposes, it is as if the person who died made the gift, rather than the beneficiary who signs the Deed. If the beneficiary simply received the gift and then passed it on themselves, it could have tax disadvantages for them. For example, if a person inherits £100,000 and gifts the money to their children and then dies within 7 years, the value of the gift is added back in to their own Estate when calculating if they have any inheritance tax to pay. If instead they had signed a Deed of Variation, the money would not have formed part of their Estate when working out their tax liability.
Each case depends upon its individual facts and there could be technical legal provisions to consider before making a final decision. It may therefore be worth obtaining advice from a specialist in this area of work, before making a final decision. Remember, any changes must be made within 2 years of the date of death.
For more information and advice, please contact a member of our Private Client team.
