Post-death Variations

Question 1

Is it possible for beneficiaries to alter what happens to the estate after a person dies?

Answer 1

Yes

• Post-death disclaimer
• Post-death variation

Question 2

What is a post-death disclaimer

Answer 2

Rejection of the assets inherited → assets pass as though original beneficiary predeceased

Question 3

When can the original beneficiary not disclaim post-death?

Answer 3

Cannot disclaim part of gift or once have accepted benefit from gift

Question 4

What is a post-death variation?

Answer 4

Allows beneficiary to redirect assets which they have inherited to someone else

Question 5

What are the formalities requirements for a post-death variation?

Answer 5

1. In writing & signed by original beneficiary (if more IHT becomes payable, PRs must also sign)
2. Within 2 years of deceased’s death
3. Not made for consideration
4. State whether variation is to be read back for IHT &/or CGT purposes

Nb. If charity due to benefit from variation, must be notified

Question 6

What does it mean to have IHT/CGT ‘read back’ in a post-death variation?

Answer 6

Treated as if testator gave legacy direct to the new beneficiary

Question 7

What is the effect of not reading back a post-death variation for the purposes of CGT / IHT?

Answer 7

PET by original beneficiary (IHT) or disposal if has risen in value since death (CGT)

Question 8

When do the PRs have to sign a post-death variation along with the original beneficiary?

Answer 8

If more IHT becomes payable as a result

(eg. original beneficiary qualified for spousal exemption, new one doesn’t so suddenly IHT to pay)