A deed of variation is used to change how an estate is distributed after death. If you want a fuller explanation of what it is and when it may be used, you can read our guide to deeds of variation. It can be a very useful option where the family wants to tidy things up, provide for somebody who was left out, or deal with the estate in a more practical or tax-efficient way.
Is there a set timescale for a deed of variation?
No, there is no fixed rule saying a deed of variation must be completed within a certain number of days or weeks.
Some are relatively straightforward. If one adult beneficiary is simply redirecting part of a cash inheritance, and everyone agrees from the outset, the process can move along quite smoothly. Others take longer because the estate is more complicated, the drafting needs more care, or there are several people involved who all need time to consider the proposed change.
The key point is that the legal deadline usually matters more than the day-to-day timetable. A variation must normally be made within 2 years of the date of death if it is to be effective for inheritance tax or capital gains tax purposes. HMRC’s guidance also makes clear that all parties need to have signed within that 2-year period.
What affects how long it takes?
In practice, the timescale usually comes down to a few simple things.
The first is agreement. If everybody understands what is being changed and why, the matter is often much easier to deal with. If someone is unsure, wants amendments to the wording, or is slow to respond, that can hold things up very quickly. GOV.UK guidance indicates that any beneficiaries left worse off by the variation will need to agree.
The second is complexity. A simple change to a cash gift is one thing. A change involving property, trusts, residue shares or tax planning is another. The more moving parts there are, the more important it is to make sure the drafting is right.
The third is timing within the estate administration itself. A deed of variation can be made before probate is completed, and HMRC’s published guidance confirms that the exact timing within the 2 year window is not critical. That said, it is generally easier to deal with the issue earlier rather than later, before matters become more complicated.
Does probate have to be finished first?
Not necessarily.
A lot of people assume they must wait until probate is complete before a deed of variation can even be considered, but that is not usually the case. HMRC’s guidance says a variation may be made before a grant of representation has been obtained. In reality, many families prefer to raise the issue once they understand what the estate looks like, but before everything has been distributed.
That is often the most sensible point to take advice. If you are already dealing with the practical side of estate administration, it can also help to understand what an executor of a will does, as that gives a clearer picture of where a deed of variation may fit into the wider process.
What can slow things down?
The most common reason for delay is family discussion.
Even where everybody gets on well, a deed of variation still changes legal entitlements, so it is important that everyone has a clear understanding of what is being proposed. If there is uncertainty over values, concern about fairness, or hesitation about signing, matters can take longer than expected.
Another issue is tax. A deed of variation can sometimes help with inheritance tax or capital gains tax, but only if the right conditions are met. HMRC guidance states that where the relevant tax treatment is intended to apply, the written instrument should include the appropriate statement of intent. That is one of the reasons why it is advisable for the document to be prepared properly rather than relying on something being patched together informally.
Does HMRC need to be notified?
Sometimes.
If the variation means that more inheritance tax becomes payable, a copy usually has to be sent to HMRC within 6 months of the date the variation is made. If it does not change the amount of inheritance tax due, GOV.UK says there is generally no need to send a copy.
That is another reason not to leave things until the last minute. Even where the family has agreed the principle of the change, the drafting and any HMRC position still need to be dealt with properly.
So, how long does a deed of variation take?
The honest answer is that it depends on the estate and the people involved.
A straightforward deed of variation can often be dealt with reasonably quickly once everyone has agreed the wording. A more complicated matter may take longer, particularly where property, trusts, tax issues or multiple beneficiaries are involved.
What matters most is not letting the issue drift. If a deed of variation may be needed, it is worth raising it early so there is enough time to get advice, agree the wording and complete everything within the 2-year period following the date of death (where the relevant tax treatment is intended to apply).
Need advice on a deed of variation?
If you are considering a deed of variation and want clear advice on timing, drafting and the practical next steps, our Private Client team can help. We can advise you on whether a deed of variation is suitable in your circumstances, prepare the paperwork properly, and help keep the process moving without unnecessary delay.
To speak to John Fowlers about wills, probate or estate administration, get in touch with our team today.