H&W made mutual wills in 2003 leaving everything to their two children. As far as I am aware this is a first marriage and the two children are the children of the marriage. W died in 2016 and her estate only comprises a half share in a property, which she owned with H as tenants in common.
W’s half share of the property is worth well in excess of the NRB. I understand that as H&W made mutual wills H cannot change his will during his lifetime. However, is it possible for W’s will to be varied (subject to the agreement of both beneficiaries) leaving everything to H so that the spouse exemption can be applied?
If the object of the exercise is to get spouse relief and bank some transferable RNRB then the children (I assume they are adult) can join in a deed of variation of W’s will to redirect W’s estate to H. You should however be prepared for HMRC to ask if any lifetime transfer of value is intended to be made by H- you might possibly incorporate a statement negating that in the deed of variation.
H can make a will in different terms but he may in doing so bring about a breach of the ambulatory trust that arose over his assets on his wife’s death. But if the children are willing it may be possible for the mutual will agreement to be modified or discharged.
I am now dealing with something similar and wondered whether it is possible for the children in this situation to disclaim their interest to achieve this end?
Alternatively if a deed of variation were done outside the 2 year time limit then am I right in thinking that there is no IHT implications for the children as their interest is akin to a reversionary interest and excluded property?