Wills 15 Flashcards
In which 3 situations will post-death changes apply to the distribution of an estate?
- Inadequate provision for certain beneficiaries* Beneficiaries do not want the property left to them* Wasted tax-saving opportunities
What are the two methods by which changes can be made to the dispositions of an estate after the deceased’s death?
- Disclaimers* Variations
How does a beneficiary disclaim an inheritance?
- Either orally or in writing (required to be effective for IHT and CGT purposes) - unless they accepted any benefit from the gift. * The effect is normally that the disclaimed gift falls into the residue or into partial intestacy if the gift is the residue.
If a beneficiary disclaims an inheritance, causing intestacy rules to apply, will they be prevented from receiving it?
No. A disclaimer of a gift under a will does not prevent the person disclaiming from receiving the property under the intestacy rules.
A testator left £10,000 to her daughter, £10,000 to her son, and the residue to her friend. The friend died before the testator. The testator never updated her will, so the gift of the residue fails. The daughter never got along with her mother, so she disclaims her gift. Who inherits the estate?
Because the residue is now passing by intestacy, the daughter and son are entitled to inherit it. So even though the daughter disclaimed the £10,000 gift, she is entitled to half of the residue estate.
Why are variations often preferred to disclaimers in the context of wills?
A variation is often used, which allows a beneficiary to change who receives their inheritance. Where a disclaimer is made, the original beneficiary has no control over the ultimate destination of the gift.
For IHT and CGT purposes, who is taxable when a variation is made to a will?
Ordinarily, a variation will be a transfer of value for IHT and a deemed disposal for CGT by the original beneficiary.
How is a variation made to a will?
To be effective for IHT and for GCT (i.e. to be read back to the date of death as if the deceased had left the assets) to the new beneficiary), the variation must be:* in writing, * made within two years of death, and * not made for monetary consideration. The PRs must sign the election if the IHT liability to the estate increases. Unlike a disclaimer, a partial variation is possible. Also, a variation can be made even if the original beneficiary has accepted a benefit.
