I have taken over a case where the wife passed away in March 2016. She made a Will in 1988 which left her estate to her husband “for his own use and benefit during his lifetime” with a substitute provision that passes the estate to further beneficiaries “on the death of my said husband or if he shall predecease me”. In my opinion that has created a life interest trust for her sole estate (which is cash of approx £77k). Everything else has passed to the spouse as the surviving joint owner.
The beneficiaries believed that the estate went to the deceased’s husband and so were quite surprised that it was only during his lifetime and did not expect to inherit.
Even though we are over the 2 years, I believe we can still vary the estate to remove the life interest and make it an absolute gift to the husband (with all beneficiaries agreement of course) and, even though there would be no reading back for tax purposes, it does not alter the IHT position of the estate, since there is no IHT liability in either scenario. No CGT either as it is cash and not shares, so I presume I would draft a DofV in the usual way and simply omit the reading back statement entirely? I have read comments by Mr Saunders regarding HMRC not accepting a variation to remove a life interest trust, however there is no tax in either scenario so I cannot see them being interested in this.
Any assistance would be appreciated.
Gemma Van Duke