I am acting for the executors of an estate where by the husband (second marriage) has been left a life interest in his wife’s half share of their matrimonial home which passes equally between her two adult children and his 2 adult children after his death with the proviso that if any of the adult children have passed away their children will inherit (his half only goes to his 2 children)
The husband and all 4 of the adult children wish to end the life interest trust and give her 2 adult children a large cash sum each – they are all in agreement with the sums involved
My question is – can this be dealt with under a deed of variation?
It turns on when the survival of the children is tested. If (as seems likely) they have to survive the husband, then minor and unborn grandchildren will still be contingent beneficiaries and you cannot have a clean variation.
Query whether you want to vary for IHT - you would lose the spouse exemption on the death.
If a recent death, could you instead use s.32 (with husband’s consent) to advance the quarter shares to the adult children absolutely?
Where do you envisage the cash coming from? Is it in residue? If not, then the husband’s children could simply buy out her children - albeit with an SDLT cost. (Remember also that a statutory variation cannot involve consideration so that would also rule it out).
Osborne Clarke LLP