Varying Wills - The Wrong Way!

Unlike some countries, the UK allows a will to be varied if the beneficiaries under it all agree. A variation of a will is often an effective way to save Inheritance Tax or to provide a fairer division of assets. However, a recent case shows that with insufficient care, the result can often be a mess. Such was the case when a woman was persuaded that the best way to avoid a considerable Inheritance Tax (IHT) liability on her late husband’s estate was to execute a deed by which she would vary his will.

Wills can be varied in most circumstances if all the beneficiaries agree to the variation within a stipulated time period. To be effective, such arrangements cannot be made ‘for consideration in money or money’s worth’.

Regrettably, the reasoning behind the deed of variation was flawed, with the result that an IHT liability resulted.

Fortunately for the woman, the court accepted that she had no knowledge of tax and little appreciation of the effect of the documents she was asked to sign. The variation to the will was therefore set aside.