I have a rather messy deed of variation and wonder if members can provide any assistance. I am varying an intestacy and we are still within the two years. Mother received whole residuary estate from deceased adult daughter and then purchased a new residential property for herself with those funds.
Mother now wishes to vary the inheritance redirecting the whole residuary estate to her surviving son (an adult). To satisfy the variation it will be necessary to transfer the ownership of a proportion of the property, equal to the value of that residue, to her son absolutely. The son is not making any financial contribution and mother will settle our fees and costs to avoid constituting consideration.
My review of the variation manuals of HMRC suggests that they will accept the variation for IHT providing that the circumstances are explained, i.e. tracing the funds from the original residue through to the current bricks and mortar. I have therefore set this situation out clearly in the deed.
My understanding of the situation is that the move was all rather swift following the death of the daughter, and mother did not have frame of mind to consider the variation then. She was relocating to be closer to son.
Son already owns a property. It occurs to me that if he had purchased the property with mother originally, then there would have been a higher rate SDLT charge. Here, I cannot readily see that there is any consideration being paid (in money or money’s worth) which would trigger a charge to SDLT on this intended transfer, I believe it to be exempt.
Can any members see any obvious hurdle that haven’t seen, which would trigger that SDLT charge in this situation? I am mindful of anti-avoidance, but the transaction was not designed to secure a tax advantage however from this perspective looking back over, it appears to enjoy one.