The query states that t he deceased held various assets with
St James Place, one of which was a Gift and Loan Trust. Presumably, however, the trust was held by the trustees and the trust assets did not form part of the deceased’s estate.
We are then told that there is a loan repayable to the estate
of approx. £80,000. Much depends on the terms of the loan agreement but, presumably, this does not contain any automatic repayment clause on the death of the lender. It seems more likely that the loan is repayable on demand and, presumably, one or more beneficiaries
of the estate has inherited the outstanding balance. It will therefore be up to them whether or not to demand repayment, either in whole or in part.
What would be the effect of waiving the outstanding balance
by means of a deed of variation? If all the usual niceties are observed, this would be treated as a transfer of value from the deceased which, depending on the terms of the trust, is likely to be a chargeable transfer, resulting in an increased IHT liability
on the estate. An alternative might be for whoever has inherited the outstanding balance to waive it. To be effective, this would need to be achieved by a formal deed, although not a deed of variation. This would be a transfer of value but, presumably,
it would be within the transferor’s available nil rate band and out of account if the transferor survives for seven years.
It should be borne in mind that the above analysis may turn out to be incorrect if any of my assumptions is incorrect.