Can Beneficiaries Change a Will After Death? Deeds of Family Arrangement in Victoria

What Is a Deed of Family Arrangement?

A Deed of Family Arrangement is a written agreement between the beneficiaries of an estate (and usually the executor) which varies the way the estate would otherwise be distributed under the Will or on intestacy.

A DFA does not change the Will itself. The Will remains the legal document under which probate is granted. Instead, the deed records the beneficiaries' agreement that, having become entitled to certain interests in the estate, they will redirect or rearrange those entitlements in a different way.

A validly made DFA is a contract that can bind the people who are parties to it. Signing does not guarantee that the deed will be effective. It must be properly executed by every person whose legal rights or entitlements are being altered, or by a representative with authority to bind that person. It can still be set aside on grounds such as incapacity, undue influence or mistake. Where a beneficiary is a minor, lacks capacity, or is unborn or unascertained, effective participation requires an appropriately authorised representative or a Court order. In some cases Court approval is required before that interest can be affected. Where no such authority is in place, the Will (or the intestacy rules) continues to govern the interest of the person who is not a party.

Why Would Beneficiaries Use a Deed of Family Arrangement?

Deeds of Family Arrangement may be used where the strict application of the Will would produce an outcome that is impractical, inconvenient or contrary to what the family considers fair. Typical examples include:

• Allocating specific assets: one beneficiary takes a particular property while another receives additional cash or shares of equivalent value.
• Equalising inheritances: adjusting shares to take into account significant gifts or financial assistance provided during the deceased's lifetime.
• Keeping an asset within the family: preserving a farm, family home or business interest in a particular branch of the family.
• Practical administration: avoiding the need to sell an indivisible asset where one beneficiary wishes to retain it.
• Resolving or pre-empting disputes: settling a foreshadowed family provision claim or addressing dissatisfaction with the Will before litigation begins.

A DFA is not a substitute for proper estate planning, but it can be a valuable tool when applied to the actual circumstances of a family after death.

Consent, Capacity and Authority

A DFA can bind only rights that the parties to it actually control. Adults with capacity may contract about their own beneficial interests. Others cannot be made to release or transfer their entitlements simply by the signatures of the adults.

• Minors and beneficiaries who lack capacity: cannot personally consent. A properly authorised representative (for example, an administrator appointed by VCAT under the Guardianship and Administration Act 2019 (Vic), or a trustee for a minor) may be required, and Court approval may be required in some cases.
• Unborn and unascertained beneficiaries: may hold contingent or future interests (for example, under a life interest or a class gift). Their interests cannot be varied by the adults' agreement alone; appropriate representation or Court sanction may be needed.
• Superannuation trustees: deal with death benefits under the fund's governing rules and the Superannuation Industry (Supervision) Act 1993 (Cth). A deed between estate beneficiaries cannot direct the fund trustee's decision. A benefit paid to the estate can be dealt with as an estate asset, subject to the applicable law.
• Other non-parties: creditors, revenue authorities and secured lenders are not bound by a deed to which they are not parties.

A DFA cannot replace a Court decision where one is needed, such as a ruling on whether a Will is valid or how it should be interpreted. Nor does a parent's, trustee's or attorney's signature alone establish authority to give up another person's inheritance.

What Risks Should Executors Consider?

An executor approached with a proposed Deed of Family Arrangement should take particular care before signing. The executor's role is to administer the estate in accordance with the Will, not to facilitate rearrangements that suit some beneficiaries at the expense of others.

Issues that require careful attention include:

• Fiduciary duties: the executor must act in the best interests of the estate as a whole and the beneficiaries collectively, and must not prefer one beneficiary over another.
• Conflicts of interest: particular caution is required where the executor is also a beneficiary whose entitlements are increased by the proposed arrangement. Disclosing the conflict and arranging independent advice are important, but do not automatically resolve the executor's duties.
• Transfers to related parties: assets redirected to a beneficiary's spouse, children, company or trust require additional scrutiny and may raise duty and tax issues that would not arise on a direct transfer.
• Informed beneficiary consent: every beneficiary affected by the deed should understand what they are giving up and what they are receiving in return. A signature obtained without proper explanation, or under pressure, makes the deed more vulnerable to being set aside if later challenged.
• Creditors and timing: estate debts, tax and other liabilities must still be provided for, and the executor should consider the time limit for family provision claims before distributing. A Part IV application must be made within six months after the grant of probate or administration (section 99 of the Administration and Probate Act 1958 (Vic)). The Court may extend time, but the extension application must be made before final distribution of the estate. It cannot disturb any distribution made before that application. These section 99 rules concern claim timing, not the separate executor protections in section 99A; simply waiting six months does not resolve every distribution risk.
• Release and indemnity: a well-drafted DFA includes appropriate releases by the beneficiaries in favour of the executor and, where appropriate, mutual indemnities between beneficiaries to deal with any liabilities that emerge after distribution.
• Independent legal advice: the executor should generally insist that each beneficiary obtain their own legal advice before signing, both to protect the beneficiary and to reduce the risk of the deed later being set aside.

An executor who participates in a poorly considered DFA may face personal exposure if a beneficiary later argues that they were misled, pressured or insufficiently informed.

Duty and Taxation Considerations

An important reason to obtain advice before signing a Deed of Family Arrangement is the potential application of Victorian land transfer duty (stamp duty) and Commonwealth capital gains tax. A deed does not create an exemption from either simply because the family has agreed to it.

Section 42 of the Duties Act 2000 (Vic)

Section 42 does not give Deeds of Family Arrangement a general exemption. It exempts particular transfers of dutiable property. The transfer must be made by the deceased person's legal personal representative (the executor or administrator) to a beneficiary, and it must not be made for valuable consideration. Within those limits:

• section 42(1) exempts a transfer made under and in conformity with the trusts contained in the Will or arising on an intestacy (or relating to property held on a trust for sale in the Will); and
• section 42(3) exempts a transfer to the extent that it is made in satisfaction of the beneficiary's entitlement under the Will or on intestacy.

The State Revenue Office (SRO) explains how it applies section 42 in Revenue Ruling DA-051, Transfer of dutiable property from a deceased estate. The SRO's separate Deceased estates and duty guidance (updated 7 August 2026) says transfers made strictly in accordance with the Will may be exempt. Transfers outside the terms of the Will, including intestacy transfers, transfers in satisfaction of an entitlement and transfers under a Part IV order, must be lodged through Duties Online for a complex assessment. The SRO then decides whether duty is payable or an exemption applies. For a section 42(3) claim, its evidentiary requirements include the grant and Will, valuations, a copy of any deed of family arrangement, and the executor's statutory declaration about entitlements and any consideration. Revenue rulings do not have the force of law, and each case is decided on its own facts.

"Each Asset" and "All Assets" approaches

When beneficiaries agree to change how gifts are distributed, DA-051 describes two approaches the SRO may use to decide how far section 42 applies. Which approach applies depends mainly on the kind of gift in the Will. The parties do not get to choose the approach that suits them.

• The "Each Asset" approach applies to specific gifts of identified property to named people. A transfer is exempt only up to the beneficiary's entitlement in that particular property, and duty is charged on the amount by which the entitlement is exceeded. In DA-051's example, a property left to one beneficiary but transferred under a deed to another person who had no entitlement to it is dutiable on its full value.
• The "All Assets" approach applies to residuary gifts (for example, "the rest of my estate to my children equally") and to intestacy. A transfer is exempt up to the beneficiary's entitlement to the estate's assets as a whole, and duty is charged on any excess. In DA-051's example, a residuary beneficiary entitled to $125,000 who takes land worth $150,000 is assessed on the $25,000 excess. Cash is not dutiable property, so a beneficiary who receives more than their share in cash does not pay duty on the excess.

These are summaries of SRO practice, not a test that every deed will pass. The result also depends on valuations, on whether any party gives valuable consideration (such as paying money from their own funds), on whether the transfer is made by the legal personal representative, and on any conditions in the Will. DA-051 says a conditional gift must be strictly complied with for the exemption to apply.

Real property and Part IV settlements

Where the deed deals with Victorian land, any transfer to a person who is not a beneficiary entitled to that property (for example, a beneficiary's spouse, child, company or trust) is likely to fall outside section 42, either completely or to the extent of the excess. Duty may then be assessed on the full value of the property or the excess.

Part IV settlements need particular care. DA-051 notes that an order of the Supreme Court or County Court under Part IV of the Administration and Probate Act 1958 (Vic) takes effect as a variation of the Will or the intestacy rules (section 97(4)). The SRO treats a transfer as exempt where it conforms with that order. If the parties settle privately and the application is simply dismissed, however, the Will is not varied. Whether section 42 applies then depends on the facts.

An intestacy case illustrates why a deed alone does not create a statutory entitlement. In Greenaway v Commissioner of State Revenue [2020] VCAT 549, as summarised by the SRO, a son became entitled to his father's estate under a deed on paying $40,000 to his mother. VCAT held that, without a court order, a transfer to a person not entitled under the intestacy rules could not satisfy section 42. This was not a Part IV settlement decision; the choice of settlement form requires advice on the actual claim.

Shares and other assets

Transfers of shares, units and similar interests can raise their own duty issues, particularly where the landholder duty rules apply to the entity. Life estates and interests in remainder are also dutiable property unless an exemption applies. The treatment depends on the asset and on the precise structure of the deed.

Capital gains tax

Under Division 128 of the Income Tax Assessment Act 1997 (Cth), when an asset passes to a beneficiary, any capital gain or loss the legal personal representative makes is generally disregarded. The beneficiary is treated as acquiring the asset on the date of death and takes the cost base set by those rules (section 128-15). Section 128-20(1)(d) says an asset passes to a beneficiary under a deed of arrangement only if both of these apply:

• the beneficiary entered into the deed to settle a claim to participate in the distribution of the estate; and
• any consideration the beneficiary gave for the asset consisted only of the variation or waiver of a claim to one or more other CGT assets that formed part of the estate.

The ATO addresses deeds in the binding part of public ruling TR 2006/14 (paragraphs 35–37), with further reasoning in its non-binding explanatory appendix (paragraphs 209–223). It states that:

• a claim can be established without starting court proceedings, for example by a potential beneficiary telling the executor they are dissatisfied with the Will;
• the Commissioner treats the provision as an alternative to a court order varying the Will, so the claim should be one a person eligible to seek family provision could make, within the relevant time limits; and
• the deed must generally be entered into before administration of the estate is complete. A later deed qualifies only in limited cases, where the beneficiary can show a court would have been likely to entertain a family provision application, or an extension of time, when the deed was made.

A deed that does not meet these conditions may involve a CGT event for the person giving up the asset, for example because a beneficiary pays cash from their own funds or the asset goes to someone with no claim on the estate. Later main residence exemption calculations may also be affected. Whether a particular deed qualifies depends on its terms and the facts, so tax advice should be obtained before signing.

A simple example

A Will leaves the residue of the estate to two children, Anna and Ben, equally. The residue is a house worth $800,000, shares worth $300,000 and $500,000 in cash, so each child is entitled to $800,000 of value. By deed, they agree that Anna takes the house and Ben takes the shares and cash.

• Entitlements: neither child receives more than their share of the residue, and nobody outside the Will takes anything.
• Duty: because this is a residuary gift, the SRO would apply the "All Assets" approach. The house does not exceed Anna's entitlement, so section 42(3) may apply. The SRO still assesses the transfer on the evidence lodged, including valuations. If the house were worth $900,000 and the other assets remained $800,000, the residue would total $1.7 million and each child's entitlement would be $850,000. Duty could then be charged on Anna's $50,000 excess, not on the whole house. If Anna instead paid Ben money from her own funds to even things up, that payment could be valuable consideration and put the exemption at risk.
• CGT: whether the house and shares are treated as passing to Anna and Ben under section 128-20 depends on how the transfer is characterised and, if it relies on the deed, on the conditions above. An agreed allocation alone does not establish a claim settlement under section 128-20(1)(d). A payment from Anna's own funds would not be a variation or waiver of a claim to estate assets.

The figures are illustrative only. Valuations, debts, the terms of the Will and the timing of the deed can all change the outcome.

Official sources

• Duties Act 2000 (Vic), section 42
• SRO Revenue Ruling DA-051
• SRO: Deceased estates and duty
• ATO Taxation Ruling TR 2006/14
• Supreme Court (General Civil Procedure) Rules 2025, rule 15.08

The above is general information only. The duty and tax consequences of a DFA depend on the particular facts and on the law and revenue office practice in force at the time. The parties should consider whether legal and accounting advice tailored to their positions is appropriate before the deed is executed.

Should Beneficiaries Obtain Independent Advice?

In most cases, yes. Independent legal advice is particularly important where any of the following are present:

• Unequal distributions: the deed results in some beneficiaries receiving materially more or less than they would have under the Will.
• Vulnerable beneficiaries: a beneficiary is elderly, unwell, financially inexperienced or otherwise in a position where informed consent cannot safely be assumed.
• Family conflict: tensions between family members create a risk that a beneficiary may sign under pressure rather than out of genuine agreement.
• Surrender of valuable rights: the deed involves a beneficiary giving up significant entitlements, including potential family provision claims.

Where a party has taken independent advice, that advice — and any record of it in the deed — is a factor the Court may consider when assessing later questions about the deed's formation and effect. Where a party has not, the deed should record that position accurately.

Frequently Asked Questions

Key Takeaways

A Deed of Family Arrangement can be a useful tool for executors and beneficiaries dealing with the practical realities of an estate. It can provide flexibility, preserve important family assets and reduce the risk of future disputes.

It should not, however, be treated as a simple administrative document. A DFA can have significant legal, duty and tax consequences for the executor and every beneficiary involved.

Before any Deed of Family Arrangement is signed, executors and beneficiaries should obtain legal and, where appropriate, taxation advice to ensure the proposed arrangement achieves the intended outcome without creating unintended liabilities.

If you require advice regarding a Deed of Family Arrangement, deceased estate administration or executor's duties in Victoria, contact Parke Lawyers for assistance.