Commentary

I4.419 Variations and disclaimers by PRs

IHT, trusts and estates

I4.419 Variations and disclaimers by PRs

I4.419 Variations and disclaimers by PRs

The instrument of variation or disclaimer must be made by the person or any of the persons who benefit or would benefit under the dispositions1.

If a beneficiary dies within two years of the testator's death the personal representatives (PRs) of the beneficiary, representing his estate, are persons who benefit for this purpose, and they can make the instrument.

Example

Victor dies, leaving his large estate (in excess of the nil rate band) to his boyfriend Colin.

Colin dies within two years, leaving his estate (his own assets and those that came from Victor) to their joint children.

Part of the children's inheritance (derived from Victor) has been subject to IHT twice (although quick succession relief may mitigate some of this double-charge – see I4.266).

Colin's executors can enter into a deed of variation redirecting the assets due from Victor directly to the children, thus saving some IHT.

They should do so with the written consent of the beneficiaries under the estate of which they are personal representatives, preferably included in the instrument of variation although HMRC will accept other written evidence of their consent2.

HMRC accepts that variations can be made which either increase or decrease the estate of the deceased beneficiary3. Care needs to be taken that there is no mutual exchange of interests under different estates, because that would take the instrument outside IHTA 1984, s 142 by reason of the rule against extraneous consideration4 – see I4.418.

Looking at the estate of the first to die, by itself, s

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