Chapter 15: Post-Death Changes

Question 1

Why might the distribution of an estate, either via a will or the rules of intestacy, not be satisfactory/suitable?

Answer 1

May be due to inadequate provision for certain beneficiaries,
Beneficiaries who don’t want the property left to them, or
Wasted tax-saving opportunities.

Question 2

What are the 2 methods by which changes can be made to the dispositions of an estate after the deceased’s death?

Answer 2

1. Disclaimers
2. Variations

Question 3

How can a beneficiary disclaim an inheritance?

Answer 3

Either orally or in writing - unless they accepted any benefit from the gift

Question 4

What is needed from a disclaimer for it to be effective for tax purposes?

Answer 4

The disclaimer must be in writing to be effective for IHT and CGT purposes.

Question 5

What is the effect of a disclaimer?

Answer 5

Effect is normally that the disclaimed gift falls into the residue or into partial intestacy if the gift is the residue.

Question 6

What does a disclaimer not affect?

Answer 6

A disclaimer of a gift under a will doesn’t prevent the person disclaiming from receiving the property under the intestacy rules

Question 7

What is the disadvantage of a disclaimer?

Answer 7

The original beneficiary has no control over the ultimate destination of the gift

Question 8

What is a variation?

Answer 8

Allows a beneficiary to change who receives their inheritance

Question 9

What is needed for a variation to be effective for IHT and CGT purposes?

Answer 9

The variation must be in writing,
Made within 2 years of death, and
Not made for monetary consideration

Question 10

When must the PRs sign the variation?

Answer 10

If the IHT liability to the estate increases

Question 11

What does it mean ‘to be effective for inheritance tax and for capital gains tax’?

Answer 11

To be read back to the date of death as if the deceased had left the asset(s) to the new beneficiary

Question 12

What are the differences between disclaimers and variations?

Answer 12

Unlike a disclaimer, a partial variation is possible.

A variation can be made even if the original beneficiary has accepted a benefit.

Question 13

Ordinarily, how will a variation be treated for tax purposes?

Answer 13

Transfer of value for inheritance tax, and
A deemed disposal for capital gains tax by the original beneficiary