Can I give up or amend a legacy after someone has died?
Our wills and probate solicitors explain how, and why, you might alter your entitlement to estate assets.
While the specific terms of any will are up to the individual who makes it, after they have died there may be circumstances where those left behind wish to pass their gift to someone else.
‘Beneficiaries are not obligated to accept their inheritance, whether under a will or under the terms of intestacy,’ says Chris Auburn, a Solicitor in the wills and probate team with Bradford & Son Solicitors in Rotherham. ‘There may be a number of reasons why beneficiaries wish to give up their interest in an estate, ranging from purely financial to the more personal.’
Often a will may have been made several years prior to a person’s death and family circumstances have changed. This could mean that their estate passes in a way which is no longer the most appropriate for the needs of their family, or in a way which is no longer tax efficient.
For example, when children are young, it is likely to be sensible to leave an inheritance by way of a trust. However, if you are the adult child of someone who has done so, the cost implications and administrative duties of dealing with a trust may no longer be worthwhile. Alternatively, the deceased person may have left their estate to their children equally, but now one is more financially independent than the other and content to forgo their own share to benefit their sibling.
Many wills are drafted to be as tax efficient as possible based on circumstances at the time of drafting, and it may be the case that changing circumstances and new tax rules mean that the will terms no longer achieve the desired effect.
Where there is no will
In the case of an estate where there is no will, intestacy rules will prevail and this may not provide for those left behind in the fairest way possible. Changing the way an estate is to be distributed can allow you to ensure that someone who would otherwise miss out will be provided for. For example, intestacy does not provide for unmarried couples, no matter how long term or serious the relationship. Varying an intestate estate of someone in this situation can allow for the deceased’s partner to inherit rather than, say, the deceased’s sibling.
Again, saving tax may be a consideration. Intestacy rules are designed to ensure that close family members are provided for and they have little concern for tax planning. As such, varying those provisions might be advantageous when it comes to how much tax an estate will be liable to pay.
Disclaiming a legacy
If you simply do not wish to receive a gift due to you from an estate, without being concerned about who else should, you may disclaim your inheritance. You may disclaim your gift in full as long as you have not accepted any part of it. If you are due to receive several gifts from the same estate, you can disclaim any one or more of them without necessarily giving up your right to the others.
If you disclaim any one individual gift you give up your right to that particular gift in its entirety. For example, if you have been left a vase, £10,000 and one quarter of the residue, you can disclaim the vase and the residue whilst still taking the £10,000 but you cannot disclaim £5,000 of the total £10,000.
If you choose to disclaim any gift, the estate will be distributed as though you have died before the testator and the will or intestacy rules will determine who should receive your gift instead. You have no control over its destination. For this reason, disclaiming is not as common as the alternative, which is to enter a deed of variation.
A deed of variation
A variation of an estate is in the hands of the person seeking to vary the will and a beneficiary, so has a much greater level of control than disclaiming. If you do not wish to receive your entire entitlement under a will, or under intestacy, you can vary your entitlement without giving it up altogether. For example, if you were due to receive £500,000 but you only need £250,000, you could forgo half of your entitlement and keep the rest.
If you vary the share of an estate which is due to you, you can decide who should receive the inheritance in your place. It could be that you feel another beneficiary (or even someone who is not already entitled to a share of the estate at all) is more deserving or more in need so that you wish that person to receive your share.
Alternatively, it may be that it is more tax efficient overall if the inheritance is redirected to a specific person. Due to the extra control a variation offers, it is often the preferred choice for a beneficiary who has chosen not to receive some or all of their inheritance.
How to vary an estate
If you choose to alter your entitlement, either by way of disclaimer or variation, you will need to do so within two years of the date of death for it to retrospectively effect inheritance and capital gains tax.
A disclaimer may be made verbally, but it is best to record the decision in writing. A variation must take place in writing.
It is important to note that some trusts and other more complex provisions may not be variable in the same way as a straightforward gift will be. It is always best to seek legal advice upon your own individual circumstances.
How can we help?
If you do not wish to benefit from an inheritance, there is no obligation on you to accept it. Giving up an inheritance does have consequences for you and for the estate, and you should seek advice before disclaiming or varying your interest so that you are content it is the right decision, and you go about it in the best way.
Our solicitors can advise you on disclaiming or varying an interest in an estate, as well as on the probate process in general, to help you make sure that you are making the best decision and that your choices are clear and legally binding.
For further information, please contact the wills and probate team on 01709 377412. Bradford & Son has its office in Rotherham, South Yorkshire.