Can you reject or redirect an inheritance?

Learn how to redirect or refuse an inheritance using a deed of variation or disclaimer, and understand the legal and tax implications.

Key takeaways

• A deed of variation redirects an inheritance; a disclaimer refuses it
• The usual tax deadline for a deed of variation is two years from death
• A deed of variation can be useful for family arrangements, tax planning, and fairness adjustments
• A disclaimer is usually the right tool if you don’t want the inheritance at all
• If property, tax, or disagreement is involved, legal advice is strongly advisable

After a death, a beneficiary (someone due to receive money, property or other assets from the estate) may decide they want to pass that inheritance to somebody else or refuse it altogether.

There are many reasons why this might happen. For example, they may feel another family member would benefit more, they may not want the responsibility of a particular asset, or they may be concerned about the tax or practical implications of accepting the inheritance.

In many cases, there are legal options available. Broadly speaking:

• A deed of variation may allow an inheritance to be redirected to another person
• A disclaimer may allow a beneficiary to decline an inheritance altogether

The right option will depend on what you’re trying to achieve and your particular circumstances. Understanding the difference between a deed of variation and a disclaimer is an important first step.

What’s a deed of variation?

A deed of variation is a legal document that changes who benefits from an inheritance after a death.

A beneficiary who is due to inherit under a will or under the intestacy rules can sometimes use a deed of variation to redirect their inheritance to someone else.

People commonly use deeds of variation to:

• Provide for a spouse, partner, child or grandchild
• Balance inheritances between family members
• Address situations where circumstances have changed since the will was written
• Support inheritance tax (IHT) planning
• Provide for a vulnerable beneficiary

A deed of variation can apply to all or part of an inheritance and can be used for money, property, shares and other assets.

Importantly, a deed of variation isn’t simply an informal family agreement. It must meet the relevant legal requirements and, where tax planning is involved, additional conditions may need to be satisfied.

What’s a deed of disclaimer?

A disclaimer is a formal refusal to accept an inheritance.

Unlike a deed of variation, a disclaimer doesn’t redirect the inheritance to a person chosen by the beneficiary. Instead, the beneficiary gives up their entitlement and the inheritance passes according to the terms of the will or the intestacy rules.

People may choose to disclaim an inheritance because they:

• Don’t need it
• Would prefer another family member to benefit
• Don’t want the responsibility of an asset
• Want to avoid practical or administrative complications

A disclaimer is often suitable where the beneficiary simply doesn’t want the inheritance at all.

Can you disclaim part of an inheritance?

Usually, a disclaimer applies to the whole gift or inheritance being refused.

If the inheritance is divided into separate distinct gifts, one gift may be disclaimed while another is accepted, but you shouldn’t assume a partial refusal will work.

What are the advantages and disadvantages of deeds of variation or disclaimers?

A deed of variation and a disclaimer can both be useful ways of changing what happens to an inheritance after a death, but they work in different ways and aren’t suitable in every situation. 

The main pros and cons will depend on your circumstances, but here are some general points to be aware of.

Advantages:

• Can provide flexibility after a death
• May help achieve a different outcome from the will or intestacy rules
• Can support IHT planning
• May avoid the need for court proceedings
• Can help resolve practical family concerns

Disadvantages:

• Mistakes can affect the validity of the arrangement
• There may be tax consequences if the relevant conditions aren’t met
• Disputes can arise if beneficiaries don’t agree or understand the implications

Key differences:

• A deed of variation can redirect an inheritance to another person, but may require agreement from those whose inheritance is affected
• A disclaimer can only be used to refuse an inheritance; it can’t redirect it to a specific person

Is a deed of variation or disclaimer legally binding?

A deed of variation is intended to be a formal and binding legal document. However, the exact effect depends on who has signed it and whether:

• Everyone whose inheritance is affected has agreed to the changes
• The deed has been completed correctly
• Any relevant tax requirements have been met
• Anyone has grounds to challenge the arrangement

A deed of disclaimer is also a formal legal document, but its effect is different. The person disclaiming is refusing the inheritance rather than varying it. 

Therefore, the key question is usually whether the disclaimer has been made correctly and whether the person has already accepted the inheritance.

Can a deed of variation or disclaimer be challenged?

A deed of variation or disclaimer may be challenged or fail where:

• The person lacked mental capacity
• The person was pressured into making the decision
• The person didn’t understand the effect of what they were signing
• There was a mistake about the intended change
• The document wasn’t properly prepared or signed
• The necessary parties didn’t agree (for a deed of variation)
• The inheritance had already been accepted (for a disclaimer)

If there are problems with the document, it could affect any tax benefits that were intended.

What’s the time limit for a deed of variation or disclaimer?

There’s usually a two year time limit to make a deed of variation if you want it to be effective for IHT and capital gains tax (CGT) purposes.

If you miss that window, the document may still be valid as a private family arrangement, but the tax treatment may be less favourable.

A deed of disclaimer isn’t usually framed around the same two year tax window. However, it generally needs to be made before the beneficiary has accepted or benefited from the inheritance.

How long does a deed of variation or disclaimer take?

There’s no fixed timescale for a deed of variation or disclaimer. 

The time required will depend on the circumstances, the complexity of the estate and, in the case of a deed of variation, how quickly those involved can reach agreement. 

When is a deed of variation or disclaimer appropriate?

The key difference is that a deed of variation can redirect an inheritance, whereas a disclaimer is a way of refusing it.

A deed of variation may be suitable if you want:

• Someone specific to benefit from the inheritance
• Only part of the inheritance to be changed
• To preserve tax planning options

A disclaimer may be suitable if you:

• Don’t want the inheritance at all
• Don’t want to become responsible for the asset
• Are content for the inheritance to pass according to the will or intestacy rules

Do you need a solicitor for a deed of variation or disclaimer?

You don’t always need a solicitor to make a deed of variation or a deed of disclaimer. But legal advice is often helpful, particularly where the estate is complex or the family situation is sensitive.

A deed of variation can go wrong if it’s not prepared or signed properly, or if important tax issues are missed. A disclaimer can also cause problems if the person doesn’t fully understand what they’re giving up, or if they’ve already acted in a way that suggests they've accepted the inheritance.

It may be sensible to seek legal advice if:

• The estate includes property
• IHT or CGT may be relevant
• More than one beneficiary is affected
• There’s any disagreement between family members
• Children or vulnerable people are involved
• The will is unclear
• You want the arrangement to be as robust as possible

A solicitor can help to:

• Make sure the document is prepared correctly
• Identify who needs to sign it
• Explain any tax implications
• Check whether a variation or a disclaimer is the right option
• Reduce the risk of the arrangement being challenged later

If you’re considering a deed of variation or disclaimer, our private client solicitors at Mills & Reeve can help.

You can contact us to discuss your circumstances and the options available.

Our content explained