Deed of Variation: Explained

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A Deed of Variation is a legal document that allows beneficiaries to alter the terms of a deceased person’s will or the rules of intestacy (when there is no will) after their death. It allows the beneficiaries to redirect their inheritance to other individuals, charities, or trusts, or to change the way their inheritance is distributed.

If you’re looking for a more comprehensive overview of Deeds of Variation, this blog post will discuss the benefits, requirements, and potential drawbacks of using one and provide practical guidance on how to create one.

When do you need a Deed of Variation?

Here are the most common situations where a Deed of Variation might be appropriate:

Scenario #1: Redistribute Assets

If beneficiaries agree that the way assets are distributed by the will (or under the rules of intestacy if there is no will) does not suit their current needs, a Deed of Variation can be used to reallocate these assets more appropriately.

Scenario #2: Tax Efficiency

To reduce the inheritance tax burden or potential capital gains tax liabilities on the beneficiaries, a Deed of Variation can redirect assets in a way that is more tax-efficient, potentially saving money for the beneficiaries.

Scenario #3: Provision for Others

If the will does not provide for certain family members or dependents who the beneficiaries feel should be included, they can use a Deed of Variation to redirect some of the estate to these individuals.

Scenario #4: Correction of Errors

If there are errors in the will, such as misnamed individuals or assets, a Deed of Variation can correct these without the need to go through potentially contentious and expensive legal processes.

Scenario #5: Settlement of Disputes

It can be used as a means to resolve disputes among beneficiaries amicably without resorting to litigation, which can be costly and time-consuming.

Scenario #6: Charitable Gifts

Beneficiaries might decide after the death that they want to support a charity. A Deed of Variation can be used to make charitable donations out of the estate, which may also have tax benefits.

Scenario #7: Clarity and Certainty

It can provide clarity and certainty if the will is ambiguous or if the wishes of the deceased were not clearly expressed, ensuring that the estate is distributed in a way that more closely aligns with what the beneficiaries believe were the deceased’s intentions.

Also read: Is A Letter Of Wishes Legally Binding in Qld?

The Deed of Variation must be made within two years after the death, and all affected beneficiaries must agree and sign the deed. This document is legally binding and effectively rewrites portions of the will or the rules of intestacy for the purposes of the estate’s administration.

How do you get a Deed of Variation? 

To obtain a Deed of Variation in Australia, you need to follow a specific process to ensure that the variation is legally valid and effective. Here’s a step-by-step guide:

Step 1: Identify the Need: First, determine the reasons for needing a Deed of Variation. This could be for tax benefits, correcting errors, redistributing inheritance, or any other lawful reason.

Step 2: Agreement among Beneficiaries: All beneficiaries affected by the proposed changes must agree to the variation. This is crucial because a Deed of Variation cannot be executed unilaterally. It requires the consent of all parties whose interests might be altered by the variation.

Step 3 Consult a Solicitor: It’s advisable to engage a solicitor who specialises in estate planning or probate law. The solicitor can provide advice on the implications of the variation, draft the deed, and ensure that it complies with legal requirements.

Step 4: Draft the Deed of Variation: The deed should clearly outline the original terms of the will or intestacy rules and specify how these are to be varied. It should include details such as the identities of all parties involved, the specifics of the assets being redistributed, and the consent of all beneficiaries.

Step 5: Signatures: The Deed of Variation must be signed by all beneficiaries who are agreeing to the change. This is typically done in the presence of a witness.

Step 6: Consideration of Tax Implications: If part of the reason for the Deed of Variation is tax planning, it may be necessary to include a statement that the variation is intended to have effect for tax purposes. This is particularly relevant if the variation could impact inheritance tax or capital gains tax.

Step 7: Notify the Executor: Inform the executor of the will about the Deed of Variation. The executor needs to be aware of the changes to properly administer the estate according to the new terms.

Step 8: Registration or Filing: While a Deed of Variation does not generally need to be registered, it’s important to keep it with the estate documents. Some states might have specific filing requirements, so it’s essential to consult with your solicitor about whether any additional steps are necessary.

Step 9: Implementation: Once the deed is executed, the executor can distribute the estate according to the new terms specified in the Deed of Variation.

What to include in a Deed of Variation?

A Deed of Variation in Australia, whether for a will or contract, typically includes the following elements:

Title: Clearly identifies the document as a “Deed of Variation.”

Date: The date the Deed of Variation is executed.

Parties: Full names and addresses of all parties involved (beneficiaries for a will, parties to the original contract).

Recitals: Background information, including:

  • For Wills: Details of the deceased person, date of death, and reference to the original will.
  • For Contracts: Details of the original contract (date, parties, a brief description).

Operative Provisions: The core of the document, stating:

  • The specific clauses or provisions of the original will or contract being varied.
  • The new terms or provisions replacing the old ones.
  • Any additional terms or conditions agreed upon by the parties.

Execution: Signatures of all parties, witnessed as required by law.

Client Scenario: Deed of Variation

Our client at Walker Pender was the beneficiary of their late aunt’s substantial estate. However, the original will provided for a distribution that did not consider the needs of a younger cousin who had recently encountered financial difficulties.

Understanding the importance of family support, our client wished to redirect a portion of their inheritance to assist their cousin.

We facilitated a Deed of Variation that not only met our client’s wish to help their cousin but also optimised the tax implications of the redistribution. Through our guidance, all beneficiaries consented, and the estate was successfully redistributed, reflecting our client’s familial intentions and enhancing tax efficiency.

Secure your family’s future with Walker Pender

Curious about estate alterations? Consider a Deed of Variation with Walker Pender. We specialise in reshaping estate distributions to better align with your family’s current needs and future aspirations.

Our expert legal team ensures seamless adjustments, optimal tax outcomes, and harmonious family agreements. Don’t wait to secure your legacy—contact Walker Pender today to ensure your estate fulfills your vision and supports your loved ones precisely as you intend.

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