Deeds of Variation by James Pinniger
For many years it has been possible for a beneficiary to re-direct their inheritance to someone else by a "deed of variation".
If that is done within two years of death the redirection is not treated as a gift by that original beneficiary but as if it the new beneficiary was always entitled under the deceased's will or intestacy. The significance of that is that the original beneficiary can give away an inheritance, or part of it without it counting against them for tax purposes even if they die within the following seven years. This has been a useful tax planning tool to ensure that if there is no will, or circumstances have changed since the will was made, estates can pass as families wish. Ed Milliband recently disclosed that deed of variation was used by his family to pass on a property following his father's death.
In his budget on 18th March George Osborne has announced a government review of the use of Deeds of Variation to ensure they do not foster tax avoidance. That review will take into account "a wide range of views" but clearly a change to the current position is possible and it must be sensible for everyone to ensure they have in place a professionally drafted will to ensure that their wishes and circumstances are accurately recorded. It would be dangerous to assume that any problems can be "sorted out" after death