Variation where proposed beneficiary did not exist at death

I have an estate which is to be distributed in accordance with a homemade will. One gift failed in part, to the extent that the intention to create a charitable trust is ineffective but it would likely still have been a valid legacy to a related and existing institution.

I have managed to seek unanimous direction from all residuary beneficiaries that the legacy can be upheld and the related institution can effectively decide what to do with the funds.

However, the conclusion is that the legacy will be paid to a new charity, which was established and registered with the Charity Commission after the death of the deceased.

The estate was taxable, so if we now enter into a variation directly leaving the legacy to the charity, then this will be beneficial to the estate as we can apply for a fairly significant tax refund.

Having reviewed the relevant sections of IHTA 1984 this of course refers to the fact that a valid instrument ‘shall apply as if the variation had been effected by the deceased’.

I can see no reference to whether there is any importance in the existence of the beneficiary at the testators death. However, as this charity did not exist until after death of the deceased, in practical terms the deceased could never have effected that variation/legacy.

This is not a point I have had to consider before. I wonder whether I am thinking to deeply and HMRC will be satisfied that the beneficiary simply has charitable status now, at the time of the variation.

Have members ever had to take this point up with HMRC or had success with any similar situations?

When executing a DoV there is no requirement that the “proposed beneficiary” under the DoV needs to have been in existence at the date of death. It is not the deceased who is actually making any gift, but the “original beneficiary”.

Malcolm Finney

Excellent, thank you very much for your response.