deed of variation and Iht

[Paula Henderson]

Beneficiary of a holiday house in an estate wants to vary will so that holiday property passes to his daughter. If beneficiary stays more than the allowed amount allowed under HMRC int 1001 is this a GWRB or will there be a POAT charge?
Similarly, if he were left cash and varied the will in favour of his wife, would he have to show that he did not benefit from the cash eg. if the money was spent on a car etc

[Peter D]

You may understand the situation but from the outside you are not making much sense. Try again. Regards Peter

[Paula Henderson]

Sorry about that.
What I mean to say, is if a beneficiary enters into a deed of variation but can still benefit from the original property, is this a GWROB? Or is there a POAT charge?
I am thinking of a situation where he had been bequeathed a property, but varies the will and the property goes to someone else. If he continues to "enjoy" the property, is this a gift with reservation even though a Deed of Variation has been done?

[pqtaxation]

Provided DoV complies with the requirements of S142 IHTA 1984 then neither GROB nor POAT would apply to legatee (beneficiary) making the disposition.

GROB rules cannot apply if the disposition is a made by an instrument of variation of a will (within IHTA 1984, s 142). For IHT purposes, the variation is treated as having been made by the deceased person whose estate is the subject of the variation, not the legatee under the will.

For POAT, any disposition made by the chargeable person in relation to an interest in the estate of a deceased person is disregarded for the purposes of Schedule 15 FA1984 if under section 17 IHTA 1984 the disposition is not a transfer of value by the chargeable person for IHT purposes. All dispositions covered by section 17, including disclaimers and variations where the provisions of section 142(1) IHTA 1984 apply, will be exempted from the charge by paragraph 16 of Schedule 15.

[Paula Henderson]

pqtaxation
What a comprehensive, clear and concise reply. Thank you. You have answered my question exactly even quoting the relevant leg. Much appreciated.

[paul1867]

This is a situation that has been troubling me and thank you for your clear explanation pqtaxation, however, I would be grateful for help why IHTA84/S142 (3) does not apply.
My case is very similar.
My brother leaves me a house which I pass to my daughter by DOV. If I then live rent free in the house that has been passed do I not gain “consideration in money or money’s worth” under IHTA84/S142 (3) which prevents IHTA84/S142 (1) from applying to the IOV. I do not fully understand the whole wording of IHTA84/S142 (3) however in my research I have found examples where it seems to confirm that one of the necessary requirements for statutory relief for a DOV is that the variation must not be made for any consideration. I hope I am not correctly understanding something here and would be grateful for advice.

A direction to HMRC int 1001 would also be appreciated as I have not been able to find this!

mANY THANKS

[Lee Young]

Paul

It could be deemed to be consideration if there was a prior agreement to occupy, but assuming not, and assuming that your daughter could force you out of the property you have not received consideration for the variation.