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What is a Deed of Variation?
It is possible to vary a Will (or an intestacy) after somebody has died. This is achieved by a Deed of Variation. This can allow, say, a parent to redirect an inheritance to their children, basically “skipping a generation” for Inheritance Tax (IHT) purposes, ie the value is not charged to IHT again on the parent’s death.
A redirection by a Deed of Variation is more tax-efficient than making a gift from one’s other resources because there is no requirement to survive by seven years to save IHT.
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A Deed of Variation must be made within two years from the date of death.
It’s important to remember that whilst a gift by Deed of Variation is treated as having been made by the deceased for tax purposes, it is still a gift by the parent for all other legal and practical purposes. So, for example, such a gift might still be liable to be set aside if made with the intention of putting the gifted assets beyond the reach of creditors.