42 thoughts on “Deed of Variation: Your Questions Answered”
Is the transfer of a property using a Deed of Variation a one-stage or a two-stage process? The deceased’s daughter was left the property in the Will, but she made a Deed of Variation to re-direct the property to the deceased’s grandson. So, does Land Registry have to transfer the Title to the daughter first, then the daughter transfers the Title to the grandson……or can the Title be transferred direct from the deceased to the grandson?
Thank you for your enquiry. The Deed of Variation varies the terms of the Will or intestacy and redirects the asset. It is as though the deceased made the gift under the terms of their Will. Therefore in your example the deceased’s daughter has no entitlement to the property it is to pass directly to the grandson provided the grandson is over the age of 18 years.
When a percentage of property is handed down by a parent to adult children on death of one of parents(deceased percentage) by deed of variation. Then more than 7 years after the surviving parent passes and there is no IHT to pay. What’s tax implications for the percentage handed down by deed of variation as there is 100 percentage incease at time of death of remaining parent.
If this was cash then after 7 years there is no tax implications.
If a deed of variation was used this means the terms of the deceased’s Will or intestacy were varied so it’s as though the gift came from the deceased, this means the seven year rule does not apply as it only applies to gifts made during someone’s lifetime (such gifts are known as potentially exempt transfers).
As you have inherited a property you inherited it at the value as at the date of death, if the property is not your main residence then on sale you will be taxed on the gain in value since the date of death, this tax is known as capital gains tax. You must report and pay the tax within 60 days of the sale, you may be able to claim the annual allowance and deductible expenses depending on your circumstances. It is vital you seek tax advice prior to any sale as the advice will be specific to your circumstances.
I’ve been left a percentage share of an estate split between 6 beneficiaries. Am I correct in thinking, if a deed of variation is done to benefit me solely, no stamp duty will be payable?
I intend to re-mortgage the property during the process to pay the other beneficiaries their share. Am I right in thinking, this will avoid all capital gains tax for them due to me gifting them the money from the re-mortgage?
I understand this has to be done within two years.
Thank you for your enquiry. The advice given below is generic advice, if you would like advice specific to your situation please contact us and we can discuss your circumstances in more detail.
When someone dies their estate may be subject to inheritance tax, depending on the value of their estate. The terms of the deceased’s Will or intestacy can be varied to redirect part of the estate elsewhere, if it it done within two years of the date of death (and the deed of variation is drafted correctly) then the effect for inheritance tax is that the gift is written back it to the Will, I.e for tax purposes it is as though the gift came from the deceased and not the original beneficiary. For a deed of variation to be varied it must be entered in to for no consideration, this means the original beneficiaries cannot receive anything as part of the transaction. For example, it will not be tax effective to change the disposition of a Will but promise to give the original beneficiary something at a later date which appears to be what you are hoping to do by remortgaging the property and giving beneficiaries the funds later.
Capital gains tax is payable when the deceased’s assets (including property) sell for more than the date of death valuation. It may be possible to mitigate the capital gains tax liability by the executors appropriating the property to the beneficiaries prior to sale. This means that each beneficiary may have use of their own capital gains tax allowance. You will need to take advice on this matter.
If you wish to buy the other beneficiaries’ share of the property then stamp duty will be payable on what you are buying. If you already own a property please bear mind that you will be paying higher rate stamp duty.
As I have said above it is really important you seek advice pertinent to your specific situation to ensure you proceed in a tax-efficient way.
Supporting Farleigh Hospice | Limited Places Available We’re delighted to announce that Cunningtons is once again partnering with Farleigh Hospice for the annual Make a Will charity campaign this September! What We’re Offering ✅ Completely FREE Will preparation by our qualified solicitors;✅ Professional legal advice and guidance on making your Will; and of course,✅ Support […]
Planning for the future as we get older is a vital part of life – that’s why many of us provide for ourselves with pensions and Wills. However, one of the most important tools available to us is often neglected: Lasting Powers of Attorney. According to CanadaLife UK, 78% of UK adults don’t have a […]
Cunningtons help with "Your Legal Journey Through Life". We cover key areas: your first home, your relationships and family law, then growing families, employment matters, dispute resolutions, property investments, and planning your estate. We focus on continuity, trust, understanding clients, and personal service by offering the same legal team throughout life.
Is the transfer of a property using a Deed of Variation a one-stage or a two-stage process? The deceased’s daughter was left the property in the Will, but she made a Deed of Variation to re-direct the property to the deceased’s grandson. So, does Land Registry have to transfer the Title to the daughter first, then the daughter transfers the Title to the grandson……or can the Title be transferred direct from the deceased to the grandson?
Thank you for your enquiry. The Deed of Variation varies the terms of the Will or intestacy and redirects the asset. It is as though the deceased made the gift under the terms of their Will. Therefore in your example the deceased’s daughter has no entitlement to the property it is to pass directly to the grandson provided the grandson is over the age of 18 years.
When a percentage of property is handed down by a parent to adult children on death of one of parents(deceased percentage) by deed of variation. Then more than 7 years after the surviving parent passes and there is no IHT to pay. What’s tax implications for the percentage handed down by deed of variation as there is 100 percentage incease at time of death of remaining parent.
If this was cash then after 7 years there is no tax implications.
Thank you for your enquiry.
If a deed of variation was used this means the terms of the deceased’s Will or intestacy were varied so it’s as though the gift came from the deceased, this means the seven year rule does not apply as it only applies to gifts made during someone’s lifetime (such gifts are known as potentially exempt transfers).
As you have inherited a property you inherited it at the value as at the date of death, if the property is not your main residence then on sale you will be taxed on the gain in value since the date of death, this tax is known as capital gains tax. You must report and pay the tax within 60 days of the sale, you may be able to claim the annual allowance and deductible expenses depending on your circumstances. It is vital you seek tax advice prior to any sale as the advice will be specific to your circumstances.
Hello,
I’ve been left a percentage share of an estate split between 6 beneficiaries. Am I correct in thinking, if a deed of variation is done to benefit me solely, no stamp duty will be payable?
I intend to re-mortgage the property during the process to pay the other beneficiaries their share. Am I right in thinking, this will avoid all capital gains tax for them due to me gifting them the money from the re-mortgage?
I understand this has to be done within two years.
Thanks in advance.
Thank you for your enquiry. The advice given below is generic advice, if you would like advice specific to your situation please contact us and we can discuss your circumstances in more detail.
When someone dies their estate may be subject to inheritance tax, depending on the value of their estate. The terms of the deceased’s Will or intestacy can be varied to redirect part of the estate elsewhere, if it it done within two years of the date of death (and the deed of variation is drafted correctly) then the effect for inheritance tax is that the gift is written back it to the Will, I.e for tax purposes it is as though the gift came from the deceased and not the original beneficiary. For a deed of variation to be varied it must be entered in to for no consideration, this means the original beneficiaries cannot receive anything as part of the transaction. For example, it will not be tax effective to change the disposition of a Will but promise to give the original beneficiary something at a later date which appears to be what you are hoping to do by remortgaging the property and giving beneficiaries the funds later.
Capital gains tax is payable when the deceased’s assets (including property) sell for more than the date of death valuation. It may be possible to mitigate the capital gains tax liability by the executors appropriating the property to the beneficiaries prior to sale. This means that each beneficiary may have use of their own capital gains tax allowance. You will need to take advice on this matter.
If you wish to buy the other beneficiaries’ share of the property then stamp duty will be payable on what you are buying. If you already own a property please bear mind that you will be paying higher rate stamp duty.
As I have said above it is really important you seek advice pertinent to your specific situation to ensure you proceed in a tax-efficient way.