Malcolm Finney has identified the gap between what HMRC will accept, and what is necessary in the “Real World” to which HMRC alludes when it suits.
The example at IHTM35042 assumes that there is no bar to the beneficiaries of W’s estate dealing with W’s entitlement to H’s estate, despite the fact that they have no legal title to it and, in any event until (or unless) it is appropriated to them, may have no beneficial interest in H’s estate at all. Without the value of H’s estate, W’s estate could be insolvent or there could be other claims on it which will potentially be affected by the variation, yet HMRC appears unconcerned.
If the variation executed only by the beneficiaries of W’s estate is presented to the executors of H’s estate, what are they expected to do? If they account to the beneficiaries and, subsequently, EX, as executor of W, submits probate and says “transfer the assets to me” the executors of H are in a pickle as they have given the estate away with no legal authority. If the deed had been executed by EX, it could perhaps reasonably be understood that the variation is itself an implied appropriation/assent of the right to H’s estate to the beneficiaries under the deed.
My personal view, which I accept is at odds with IHTM35042, is that the personal representatives of the deceased beneficiary should always be a party to any variation of that beneficiary’s entitlement if, as at the date of the variation, the entitlement from the first estate which is to be varied has yet to be transferred into the control of those purporting to make the variation. It is only the personal representatives of the first estate who I would not normally expect to be a party (in the light of the closing words of s.142(2A) IHTA 1984).
I am told that HMRC’s view is “pragmatic” as otherwise it would reject too many variations as they are executed only by the beneficiaries and not by the personal representatives of the deceased beneficiary. However, if executed by the personal representatives, but not their beneficiaries, the personal representatives can be put through hoops to prove the beneficiaries consent to the variation (even if it is wholly in their favour). Inconsistent?
Rather than educating the drafters of such documents to use formats that comply with the legislation, HMRC accepts what, in relation to other matters, it would call “shoddy” and reject out of hand. Does this promote “good practice”, let alone “best practice”?