I4.417 Estate which may be subject to variation or disclaimer
A variation or disclaimer can extend to any of the property comprised in a person's estate immediately before his death (see I4.111) subject to three qualifications contained in IHTA 1984, s 142(5) and a possible qualification arising from IHTA 1984, s 142(4).
First, a person's estate immediately before his death does, for these purposes, include excluded property. The general rule of course, for IHT, is that excluded property is not included.
This inclusion gives an added measure of flexibility in appropriate cases.
T died domiciled in France. His estate includes a house in London valued at £500,000 which he leaves to his son, and shares in a Jersey company also valued at £500,000 which he leaves to an English charity. T's son and the charity agree to exchange interests by way of variation of T's Will, so that the London house will pass to the charity exempt from IHT, and the shares being excluded property pass directly to the son.
But for IHTA 1984, s 142(5) the variation would not attract relief because the assignment by the charity would be treated as a variation made for a consideration in money's worth. The Jersey shares, not being comprised in T's estate immediately before his death, could not be the subject of a disposition for the purposes of s 142(1), (3) if it were not for s 142(5).