Deed of Variation and multiple deaths

Trusts Discussion
1

I have three linked estates and am wondering whether it is possible to complete deeds of variation to improve the IHT position.

The husband (H) died first then his wife (W) died about 4 months later then their son (S) died a month or so after that (over 18 years and no children of his own). All have wills and no survivorship clauses in:

H will left life interest in his 1/2 share house to W (then to S and the daughter) and residue to W - so no IHT.

W will left all to S and daughter - no IHT as could claim NRB and RNRB.

S will left all to daughter (again an adult). He had less that NRB so on own estate no IHT but when add in his 1/2 share of H and W estates will be substantial IHT payable

The adult daughter is therefore the only beneficiary of all three estates. She is also executor of H and W estate and her children are executors of S estate.

My question is can the daughter effect a deed of variation to either or both parents estates so that S share passes directly to her instead of into his estate thus resulting in no IHT? I know that a deceased beneficiary can vary an estate through their own beneficiaries/executors but with this being more complex with there being three estates involved wondering if this is possible?

2

I don’t see why it should not be done, with a bit of careful drafting:

  1. Divert H’s gift of the remainder in the house to D - consent required from S’s executors and D;
  2. Divert W’s gift of residue to D - consent required from S’s executors and D.

D has to sign in a number of capacities. I don’t think that is a problem, as there is some case law about contracting in different rights, but worth checking.

Josh Lewison
Radcliffe Chambers

3

S’s executors would need to execute the DoV redirecting S’s remainder interest in the house to D under H’s will and S’s executors would also need to execute a DoV redirecting S’s 50% interest to D under W’s will.

None of the above involves a re-direction of the same item more than once which is prohibited under Russell and Anor v IRC [1988].

Malcolm Finney