I am dealing with the estate of a surviving spouse where on the first death the husband included in his Will a clause regarding personal chattels as follows:
“I give all my remaining personal chattels (standard 1925 definition) to my wife and it is my wish that if there are any items that she does not want to keep for herself that she offers these as a gift to my son and grandson”
The wife gifted within two years of H’s death some items to her step-son that she did not wish to keep. I am calculating the available TNRB and my view is that the gifts were automatically read back (rather than being PETS of the wife) and should erode some of H’s NRB. Does anyone think differently based on the above wording of late husband’s Will?
Section 143 reads:
“Where a testator expresses a wish that property bequeathed by his will should be transferred by the legatee to other persons, and the legatee transfers any of the property in accordance with that wish within the period of two years after the death of the testator, this Act shall have effect as if the property transferred had been bequeathed by the will to the transferee.”
First of all, a “bequest” is a legacy of personal property, not real estate. I have only ever seen a precatory legacy like this in the context of chattels, but it could be other personal property.
My view is that s143 takes effect automatically whether the original legatee (here, the spouse) likes it or not, rather like s144 and (in relation to disclaimers only) s142 IHTA, but unlike in relation to instruments of variation (where one actually has to elect for s142 IHTA and s62(6) TCGA to apply - in some cases one might elect for s142 to apply, but not s62(6), or vice versa).
For this reason, I consider it unwise to include in the Will a request that the surviving spouse / civil partner make onward gifts in this way. The testator could let their spouse know in some other way what they would like the spouse to do with certain chattels - it does not really matter, as either way it is entirely up to the spouse whether to make the onward gifts. Since the surviving spouse (a) has the benefit of the annual giving allowance (£3,000) and the small gifts exemption (£250) and (b) has at least some chance of surviving 7 years from the onward gift, it is very likely to be better from an IHT standpoint not to have s143 apply. This only helps where the legacy in the Will is to the spouse and will get the benefit of the spouse exemption from IHT.