I wonder if any Forum members could advice of any time limit after the date of death of the Testator for the spouse who takes the entire estate to pass the entire estate to the children of her and the deceased? I realise the gift will be a PET.
If there is a time limit, what is the authority please?
Garden House Solicitors
There is no formal time limit, because this practice has no statutory recognition.
However HMRC may seek to argue that it is in reality a testamentary gift by the spouse who dies first to non-exempt beneficiaries. I would expect an argument based on sec 268 IHTA -the ‘associated operations’ rule- to the effect that the gift by the recipient spouse was part of an arrangement with the other spouse which comes within the rule. This is going to turn on the facts of the case and the time lapse between death and gift is only one of them.
I have heard it said that death is not capable of being an associated operation, although I’m not aware of any authority to this effect; I have also heard it said that whilst death may not be an ‘operation’, a will could be. The section makes it clear that ‘operation’ includes an omission, so normal English usage is clearly only of limited application.
I have some clients in a similar situation and I’d be very interested to hear other contributors experiences.
I don’t believe there is any time limit. As long as there is a qualifying IPDI at the date of death, the spouse exemption would apply. So, technically, the next day would be fine.
KRS Estate Planning
No minimum at all for an absolute interest, you only need to exercise caution if the spouse’s interest was created by DoV.
Osborne Clarke LLP
It might be sensible to use a deed of variation - making the relevant tax statement only for the purpose of CGT (not IHT).
If the estate went to the widow as an interest in possession trust rather than outright there is a possible concern that, if the interest is terminated too quickly, it never existed in the first place. That concern will not to apply if the estate goes outright to the widow.
Associated operations ought not to be in point assuming there was no agreement that the widow would make the transfer. Read the extract from Hansard on this point (dated 10 March 1975) which is referred to in the footnotes to s. 268 in the yellow book.
I have read somewhere (HMRC Manual I think), that HMRC will look further into PET’s made by spouse if DoV effected and PET made within two years.
I Will Solicitors Ltd