Post death variations in cross border estates

By Tolley in association with Richard Frimston at Russell-Cooke Solicitors

The following Trusts and Inheritance Tax guidance note by Tolley in association with Richard Frimston at Russell-Cooke Solicitors provides comprehensive and up to date tax information covering:

Post death variations in cross border estates
Loss relief claims
Variations
Disclaimers
Succession Claims
Discretionary Will Trust Distributions

In the UK, Inheritance tax on death may be altered or deferred in a number of ways:

•a claim for relief may be made where the value for inheritance tax purposes has decreased (Loss Relief Claims)
•varying the way in which the deceased’s estate devolves and electing to treat such variation as having been made by the deceased for inheritance tax purposes (Variations)
•a beneficiary disclaims his inheritance so that a different beneficiary becomes entitled, who is then treated for tax purposes as having inherited directly from the deceased (Disclaimers)
•a claim may be made by family members and dependants which produce different tax results (Succession Claims)
•distributing out of a discretionary Will trust (Trust Distributions)

In a cross border context Variations are generally mere tax fictions and are very unlikely to be recognised in another jurisdiction.

Common law jurisdictions may have more scope for tax planning since assets usually vest in personal representatives rather than direct in beneficiaries. The USA and France are cited below as particular examples, but local advice is always necessary.

Disclaimers are certainly a more universally understood concept. Any relevant time limits are certain to be different and are very easy to miss.

Loss relief claims

Where qualifying conditions apply, a claim can be made to reduce inheritance tax payable when the value of land or shares in an estate has reduced after the date of death. See the Sale of land from deceased estate and Sale of shares from deceased estate guidance