Changing Wills For Benefit

A will expresses the final wishes of the deceased person and it is commonly thought that a will is irrevocable after death. However, provided everyone agrees, it is normally possible to vary a will provided that the application is made within two years of the death.

A Deed of Family Arrangement, or DFA, (also known as a Deed of Variation) is a legal document which can be used to 'rewrite' provisions of a will. While these were originally introduced to protect dependents from being unfairly deprived, they are now mainly used to reduce Inheritance Tax (IHT).

After the recent surges in house prices, IHT will be charged on thousands of estates purely as a result of the increasing value of the deceased’s home.

Often, a will specifies that a surviving spouse will inherit all the assets of the deceased. In many instances, the surviving spouse is comfortably off and would like to pass assets to the next generation. By using a DFA, the superfluous assets can be passed directly to them (or into trust), with a potential IHT saving of 40 per cent on the value transferred.

To be effective, a DFA must be made in writing and signed by all of the beneficiaries who would lose entitlement to the affected part of the deceased person’s estate. If this affects any person under age eighteen, it may require the formal approval of the court.