It is common knowledge that a person can vary the provisions of a will during his lifetime, but it is not so well known that the provisions of a valid will or the normal laws of inheritance applicable on intestacy are sometimes, quite legally, changed by the beneficiaries after someone’s death. Also if a beneficiary of an estate inherits surviving his benefactor’s death and then dies, his personal representatives can disclaim or vary his inheritance if they have consent of those who benefit under his will or intestacy.
Types of variation:
The changes may take place either:
With the consent of all the beneficiaries affected (usually set out in a deed known as a deed of family arrangement, although the document need not be a deed and any form of writing will be sufficient)
With the consent of one or more beneficiaries (as when a surviving spouse or civil partner decides to exercise the right given to her by the law in the case of intestacy to take a capital sum instead of income during the remainder of her life, or a beneficiary under a will disclaims the inheritance)
Without the consent of the beneficiaries as a result of, say, a successful claim under the Inheritance (Provision for Family and Dependants) Act 1975 as amended
Reasons to vary
The reasons for wishing to change the terms of a will are many and various, for example:
Sometimes a will has not been updated for many years and the circumstances in which it was made may have completely changed by the date of death
Sometimes it is decided to settle claims made under the Inheritance Act 1975 as amended by entering into an out-of-court settlement
Instead of settling the question by an expensive application to a court, executors and beneficiaries might wish to settle problems created by poor drafting or typing of the will by agreement and to record the agreement in writing rather than risk further disputes
It might be desired to give executors wider powers than are provided for in the will, for example, to widen the executor’s power in relation to the investment of bequests made to underage beneficiaries
The beneficiaries might wish to provide for someone considered to have been overlooked or wealthy people might wish to substitute bequests to their children or grandchildren for bequests to themselves
The most common reason of all is to alter the provisions of the will in such a way as to ensure that less tax is incurred, although alterations purely for the purpose of saving tax are open to challenge by HMRC
Some changes to the provisions of a will or to the devolution of an estate under the laws of intestacy can save very considerable amounts of tax if the estate is large, but others increase the amount of tax payable. The changes can affect not only inheritance tax, but also capital gains tax, income tax and means tested social security benefit payments, and may cost substantial sums in stamp duty and legal fees to implement, but in the right circumstances and if carefully and knowledgeably done, they can be very worthwhile.
It is essential that advice should be taken form a solicitor or accountant who is knowledgeable about tax law before such a course of action is finally embarked upon. Suffice it to say that if a change is to be made, the difference between disclaiming something to be inherited from a will or under laws of intestacy and caring the provisions of a will or the laws of intestacy must be clearly understood.