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UK Deed of Family Arrangement (Deed of Variation)
Draft a UK Deed of Family Arrangement (also known as a Deed of Variation) varying dispositions taking effect on death under section 142 of the Inheritance Tax Act 1984 and section 62(6) of the Taxation of Chargeable Gains Act 1992. The deed must be made within the strict 2-year deadline from the date of death — the deadline is statutory and cannot be extended by HMRC or the courts. Free includes the mandatory IHT and CGT election wording; Expert adds multi-variation, Transferable Nil-Rate Band (TNRB ss.8A-8C) + Residence Nil-Rate Band (RNRB ss.8D-8M) optimisation up to £1,000,000 combined shelter, spousal exemption under s.18, BPR / APR planning, discretionary trust creation under the relevant property regime, and HMRC Form IOV2 filing within 6 months.
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DEED OF FAMILY ARRANGEMENT — VARIATION OF DISPOSITIONS UNDER IHTA 1984 s.142
Estate Of Mrs Margaret Eileen Whitmore (Date Of Death 14 February 2025) · Made 4 June 2026
VARYING BENEFICIARY
Mr David Henry Whitmore
The Old Vicarage, Lower Halling, Kent ME2 1LH
NEW BENEFICIARY
Miss Sarah Catherine Whitmore
47 Wycliffe Court, Putney, London SW15 6QD
Estate of Mrs Margaret Eileen Whitmore
IHTA 1984 s.142 + TCGA 1992 s.62(6) · 2-year deadline
THIS DEED OF FAMILY ARRANGEMENT is made on 4 June 2026 between Mr David Henry Whitmore (the "Varying Beneficiary") and Miss Sarah Catherine Whitmore (the "New Beneficiary") in respect of the estate of Mrs Margaret Eileen Whitmore who died on 14 February 2025 last residing at 8 Larkspur Lane, Sevenoaks, Kent TN13 1FZ (the "Deceased").
The Deceased's estate is administered under the deceased's Last Will and Testament dated 22 May 2018 (Grant of Probate / Letters of Administration no. PR2025-WLT-0428). The Varying Beneficiary is currently entitled to the cash legacy described below and wishes to vary that disposition in favour of the New Beneficiary in accordance with the terms set out below.
The Deceased's estate is administered under the deceased's Last Will and Testament dated 22 May 2018 (Grant of Probate / Letters of Administration no. PR2025-WLT-0428). The Varying Beneficiary is currently entitled to the cash legacy described below and wishes to vary that disposition in favour of the New Beneficiary in accordance with the terms set out below.
1. The original disposition. The Varying Beneficiary's current entitlement under the deceased's Last Will and Testament is:
A cash legacy of £200,000 (two hundred thousand pounds) bequeathed to the Varying Beneficiary under clause 6.2 of the Deceased's Last Will and Testament dated 22 May 2018.
Estimated value: £200,000.
A cash legacy of £200,000 (two hundred thousand pounds) bequeathed to the Varying Beneficiary under clause 6.2 of the Deceased's Last Will and Testament dated 22 May 2018.
Estimated value: £200,000.
2. The variation. The Varying Beneficiary HEREBY VARIES the disposition described in clause 1 above so that, with effect from the date of the Deceased's death, the asset / entitlement passes to the New Beneficiary absolutely free of any interest of the Varying Beneficiary.
Reason for variation: The Varying Beneficiary (the Deceased's son) wishes to redirect his legacy to his daughter (the Deceased's granddaughter) for inheritance tax planning purposes and to support her purchase of a first home under the Residence Nil-Rate Band optimisation framework.
Reason for variation: The Varying Beneficiary (the Deceased's son) wishes to redirect his legacy to his daughter (the Deceased's granddaughter) for inheritance tax planning purposes and to support her purchase of a first home under the Residence Nil-Rate Band optimisation framework.
3. STATUTORY ELECTIONS — Inheritance Tax Act 1984 s.142(2) and Taxation of Chargeable Gains Act 1992 s.62(6).
3.1 IHT election (IHTA 1984 s.142): The parties to this variation HEREBY GIVE NOTICE that section 142 of the Inheritance Tax Act 1984 is to apply to the dispositions made by this Deed. The variation is treated for IHT purposes as if it had been made by the Deceased in accordance with section 142(1) IHTA 1984.
3.2 CGT election (TCGA 1992 s.62(6)): The parties to this variation HEREBY GIVE NOTICE that section 62(6) of the Taxation of Chargeable Gains Act 1992 is to apply to the dispositions made by this Deed. The acquisition cost and acquisition date for the New Beneficiary are treated for CGT purposes as if the asset had been acquired directly from the Deceased's personal representatives at probate value.
3.3 Two-year deadline. The parties confirm that this Deed is being executed within 2 years of the date of death (14 February 2025) in accordance with IHTA 1984 s.142(1). The deadline is statutory and cannot be extended by HMRC or the courts.
3.1 IHT election (IHTA 1984 s.142): The parties to this variation HEREBY GIVE NOTICE that section 142 of the Inheritance Tax Act 1984 is to apply to the dispositions made by this Deed. The variation is treated for IHT purposes as if it had been made by the Deceased in accordance with section 142(1) IHTA 1984.
3.2 CGT election (TCGA 1992 s.62(6)): The parties to this variation HEREBY GIVE NOTICE that section 62(6) of the Taxation of Chargeable Gains Act 1992 is to apply to the dispositions made by this Deed. The acquisition cost and acquisition date for the New Beneficiary are treated for CGT purposes as if the asset had been acquired directly from the Deceased's personal representatives at probate value.
3.3 Two-year deadline. The parties confirm that this Deed is being executed within 2 years of the date of death (14 February 2025) in accordance with IHTA 1984 s.142(1). The deadline is statutory and cannot be extended by HMRC or the courts.
5. Tax optimisation framework.
5.1 Transferable Nil-Rate Band (TNRB). This variation supports a TNRB claim under sections 8A-8C of the Inheritance Tax Act 1984 (Finance Act 2008) by ensuring that the Deceased's nil-rate band is fully utilised. The current NRB for the 2026/27 tax year is £325,000; the transferable NRB increases the survivor's available NRB to up to £650,000 on death.
5.2 Residence Nil-Rate Band (RNRB). The variation is structured to preserve / optimise the Residence Nil-Rate Band under sections 8D-8M of the Inheritance Tax Act 1984 (Finance (No.2) Act 2015). The current RNRB for 2026/27 is £175,000 per person, available where qualifying residential interest passes to direct descendants. Combined NRB + RNRB + transferred bands can shelter up to £1,000,000 from IHT in optimal cases.
5.3 Business Property Relief / Agricultural Property Relief. The Deceased held no qualifying business or agricultural property at the date of death — BPR / APR not engaged.
5.1 Transferable Nil-Rate Band (TNRB). This variation supports a TNRB claim under sections 8A-8C of the Inheritance Tax Act 1984 (Finance Act 2008) by ensuring that the Deceased's nil-rate band is fully utilised. The current NRB for the 2026/27 tax year is £325,000; the transferable NRB increases the survivor's available NRB to up to £650,000 on death.
5.2 Residence Nil-Rate Band (RNRB). The variation is structured to preserve / optimise the Residence Nil-Rate Band under sections 8D-8M of the Inheritance Tax Act 1984 (Finance (No.2) Act 2015). The current RNRB for 2026/27 is £175,000 per person, available where qualifying residential interest passes to direct descendants. Combined NRB + RNRB + transferred bands can shelter up to £1,000,000 from IHT in optimal cases.
5.3 Business Property Relief / Agricultural Property Relief. The Deceased held no qualifying business or agricultural property at the date of death — BPR / APR not engaged.
6. HMRC Form IOV2 — Instrument of Variation Checklist. Where the variation gives rise to IHT or CGT consequences, the parties intend to file HMRC Form IOV2 (Instrument of Variation Checklist) with HM Revenue and Customs by 4 December 2026. The parties acknowledge their joint responsibility for accurate disclosure and for retaining supporting documentation for at least 6 years (Limitation Act 1980 s.5).
8. Governing law and execution as a deed. This Deed of Family Arrangement is governed by the law of England and Wales and is executed as a deed within the meaning of section 1 of the Law of Property (Miscellaneous Provisions) Act 1989. The 12-year limitation period under section 8 of the Limitation Act 1980 applies to any action on this Deed.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.
EXECUTED AS A DEED BY THE VARYING BENEFICIARY
Mr David Henry Whitmore
Varying Beneficiary · 4 June 2026
Date: ____________________
EXECUTED AS A DEED BY THE NEW BENEFICIARY
Miss Sarah Catherine Whitmore
New Beneficiary · 4 June 2026
Date: ____________________
VARYING BENEFICIARY — WITNESS
[Witness Name]
Witness (sign, full name, occupation, address)
Date: ____________________
NEW BENEFICIARY — WITNESS
[Witness Name]
Witness (sign, full name, occupation, address)
Date: ____________________
Available as a print-ready PDF or an editable Microsoft Word (.docx) file.
What Is a UK Deed of Family Arrangement?
A UK Deed of Family Arrangement (also called a Deed of Variation, Instrument of Variation, or Post-Death Variation) is a formal deed by which the beneficiaries of a UK deceased's estate agree to alter the dispositions of property taking effect on death — either under the deceased's Will or under the intestacy rules. The variation may redirect a cash legacy, a specific bequest, a share of residue, real property, shares, or any other interest in the estate. Provided the deed is properly drafted and executed within the statutory 2-year deadline, the variation is treated for Inheritance Tax (IHT) purposes as if it had been made by the deceased — the so-called "read-back" effect under <em>section 142 of the Inheritance Tax Act 1984</em>. The corresponding Capital Gains Tax (CGT) read-back is achieved under <em>section 62(6) of the Taxation of Chargeable Gains Act 1992</em>.
The IHT and CGT elections are MANDATORY for read-back effect. Without explicit election wording in the deed, HMRC will treat the variation as a lifetime gift from the original beneficiary to the new beneficiary — triggering all the IHT, CGT, and (potentially) income tax consequences that the deed is designed to avoid. The election wording is prescribed by statute: "The parties to this variation give notice that section 142 of the Inheritance Tax Act 1984 is to apply to the dispositions made by this Deed" and the equivalent CGT wording. The deed must also be in writing, signed by all beneficiaries whose interests are altered, and executed within 2 years of the date of death.
In UK estate planning practice, Deeds of Family Arrangement are the most versatile post-death tax planning mechanism. They can redirect inheritance to optimise use of the deceased's Nil-Rate Band (£325,000 for 2026/27), Residence Nil-Rate Band (£175,000 for 2026/27), Transferable Nil-Rate Band of a pre-deceased spouse, spousal exemption under section 18 IHTA 1984, Business Property Relief, Agricultural Property Relief, or to create a discretionary trust for the next generation. A well-drafted DoFA can shelter up to £1,000,000 of inheritance from IHT in optimal cases — combining NRB + RNRB + transferred bands of a pre-deceased spouse. HMRC Form IOV2 (Instrument of Variation Checklist) must be filed within 6 months of the variation where IHT or CGT consequences arise.
What's Covered in This Template
Our UK Deed of Family Arrangement template generates a properly-executed variation deed with the mandatory IHTA 1984 s.142 and TCGA 1992 s.62(6) elections.
Deceased & Estate Identification
Deceased name, date of death, last address, Will or intestacy, Will date, probate grant number.
Beneficiary Identification
Varying beneficiary (giving up entitlement) + new beneficiary (receiving) — both sign the deed.
Asset Identification
Cash legacy, specific legacy (chattel / jewellery / art), share of residue, real property, shares, or other.
IHT Election (IHTA 1984 s.142)
Mandatory statutory election — "The parties give notice that section 142 of the Inheritance Tax Act 1984 is to apply."
CGT Election (TCGA 1992 s.62(6))
Mandatory CGT election — read-back for capital gains purposes; acquisition cost treated as probate value.
2-Year Deadline Reminder
The deed MUST be executed within 2 years of the date of death — statutory deadline; no HMRC or court extension available.
Multi-Variation Support (Expert)
Multiple variations between multiple beneficiaries in a single deed — same elections cover all variations.
TNRB ss.8A-8C (Expert)
Transferable Nil-Rate Band from a pre-deceased spouse — combined NRB up to £650,000 (Finance Act 2008).
RNRB ss.8D-8M (Expert)
Residence Nil-Rate Band — £175,000 per person for 2026/27 — qualifying residential interest to direct descendants.
Spousal Exemption s.18 (Expert)
Unlimited spousal / civil-partner exemption under section 18 IHTA 1984 — redirect to surviving spouse to defer IHT.
Discretionary Trust Creation (Expert)
Post-death discretionary trust under IHTA 1984 s.142 — relevant property regime with 10-yearly + exit charges (up to 6%).
HMRC Form IOV2 (Expert)
Instrument of Variation Checklist filed with HMRC within 6 months of the variation where IHT / CGT consequences arise.
How to Create a UK Deed of Family Arrangement
Follow these steps to draft a 2-year-compliant Deed of Family Arrangement with the mandatory IHTA 1984 s.142 and TCGA 1992 s.62(6) elections.
- 1
Identify the Deceased and the Estate
Enter the deceased's full legal name, date of death, last address, and whether they died testate (Will) or intestate. Enter the Will date and probate grant number if available. Confirm that the 2-year deadline from the date of death has not passed — this is the single most important practical check for any UK Deed of Family Arrangement.
- 2
Identify the Varying and New Beneficiaries
Enter the varying beneficiary (the person currently entitled who is giving up their interest) and the new beneficiary (the person receiving the variation). Both must sign the deed under IHTA 1984 s.142(2). The varying beneficiary must be the current beneficial owner of the interest being varied — typically named in the Will, or entitled under the intestacy rules.
- 3
Describe the Asset and Make the Statutory Elections
Select the type of asset being varied (cash, specific legacy, residue share, property, shares, other) and provide a description and estimated value. Select YES to both the IHT election under IHTA 1984 s.142 and the CGT election under TCGA 1992 s.62(6) — both are MANDATORY for read-back effect. Without explicit election wording, HMRC will treat the variation as a lifetime gift triggering full IHT, CGT, and potential income tax consequences.
- 4
Add Tax Optimisation (Expert)
In Expert mode, confirm whether the variation supports a Transferable Nil-Rate Band claim under IHTA 1984 ss.8A-8C, optimises the Residence Nil-Rate Band under ss.8D-8M, makes use of the spousal exemption under s.18, and engages Business Property Relief / Agricultural Property Relief. Combined NRB + RNRB + transferred bands can shelter up to £1,000,000 from IHT in optimal cases for 2026/27.
- 5
Consider Discretionary Trust Creation and File HMRC IOV2 (Expert)
In Expert mode, if the variation creates a discretionary trust, set out the trust terms — trustees, beneficiaries, trust period, distribution powers. The trust falls within the relevant property regime under Chapter III of Part III IHTA 1984. The Income Tax Act 2007 s.625 settlements legislation is relevant. Confirm whether HMRC Form IOV2 (Instrument of Variation Checklist) will be filed within 6 months of the deed date where IHT or CGT consequences arise — required filing under HMRC practice.
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Legal Considerations
A UK Deed of Family Arrangement is a powerful but technical post-death tax planning instrument. The 2-year deadline and the mandatory election wording are unforgiving; professional advice is strongly recommended.
This template is for informational purposes only and does not constitute legal or tax advice. UK post-death tax planning is technical and fact-sensitive — consult a qualified UK probate solicitor and a tax adviser before executing a Deed of Family Arrangement, particularly where pensions, business property, agricultural property, or non-UK assets are involved.
Reviewed for England & Wales — IHTA 1984 + TCGA 1992 framework
IHTA 1984 s.142 — The IHT Read-Back Election
Section 142 of the Inheritance Tax Act 1984 permits a beneficiary to vary the disposition of property taking effect on the deceased's death, with the variation treated for IHT purposes as if it had been made by the deceased. The election under section 142(2) must be in writing, signed by every beneficiary whose interest is altered, executed within 2 years of the date of death, and contain the explicit statement that section 142 is to apply. The deadline is statutory — neither HMRC nor the courts can extend it. Section 142(3) requires written acknowledgement that the election is intended; our template generates the prescribed wording automatically.
TCGA 1992 s.62(6) — The CGT Read-Back Election
Section 62(6) of the Taxation of Chargeable Gains Act 1992 is the CGT equivalent of IHTA 1984 s.142. The election is made in the same deed, with the same parties, within the same 2-year deadline. The effect is to treat the new beneficiary as acquiring the asset directly from the deceased's personal representatives at probate value (the deceased's "death value" for CGT purposes), rather than as a transfer from the varying beneficiary at market value. This avoids triggering a chargeable gain on the varying beneficiary. Both elections (IHT and CGT) must be made expressly — they are not automatic and they are not interchangeable.
Tax Optimisation Framework
For 2026/27, the UK IHT optimisation framework is: NRB <strong>£325,000</strong> per person (frozen under successive Finance Acts); RNRB <strong>£175,000</strong> per person where qualifying residential interest passes to direct descendants; TNRB up to <strong>£650,000</strong> on the survivor's death combining own NRB with unused NRB of pre-deceased spouse; RNRB tapering down to nil for estates above £2,000,000; Business Property Relief (50% / 100%) on qualifying business property; Agricultural Property Relief (50% / 100%) on qualifying agricultural property; spousal / civil-partner exemption under IHTA 1984 s.18 (unlimited). Combined optimal shelter can reach <strong>£1,000,000</strong> per married couple. A well-drafted Deed of Family Arrangement leverages all of these reliefs.
Discretionary Trust Creation and HMRC IOV2
A Deed of Family Arrangement creating a discretionary trust under IHTA 1984 s.142 falls within the <strong>relevant property regime</strong> under Chapter III of Part III IHTA 1984. The trust is subject to (a) a periodic charge every 10 years at up to 6% on the trust value above the available NRB; (b) exit charges when capital is distributed; and (c) income tax under the settlements legislation in Income Tax Act 2007 s.625 if the settlor retains an interest. HMRC <strong>Form IOV2 (Instrument of Variation Checklist)</strong> must be filed within 6 months of the variation where IHT or CGT consequences arise. The trustees should retain supporting documentation for at least 6 years under the Limitation Act 1980 s.5 framework, and longer where pension or property assets are involved.
Frequently Asked Questions
Draft Your UK Deed of Family Arrangement Now
Use our free template to draft a UK Deed of Family Arrangement compliant with IHTA 1984 s.142 and TCGA 1992 s.62(6) within the 2-year deadline. Mandatory statutory election wording, multi-variation support, TNRB + RNRB + spousal exemption optimisation, discretionary trust creation under the relevant property regime, and HMRC Form IOV2 filing framework — all in one execution-ready deed.
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