X died 18 months ago leaving her estate to sibling Y. Assets have been vested in Y.
Y has recently died and we are drawing up an IOV for Y’s beneficiaries to vary the disposition of X’s estate in their favour to prevent taxation again in Y’s estate.
The principal asset in X’s estate was a house in which Y was living. This has increased in value in the period since X’s death.
My question is - should the reading back intention for CGT purposes be included in the IOV or not?
If we include the intention, the beneficiaries would take the house at the value at X’s death which would give them a lower base cost and a higher CGT bill on sale.
If we do not include the intention, does the disposal of the house (by Y’s executors?) benefit from the usual uplift to market value on death rules so that the beneficiaries would take it at the higher value and there would be no CGT liability in respect of the increase in value between the two deaths?