Separate settlements: variations of trusts: instrument of variation of will or intestacy
TCGA92/S62 (7) TCGA92/S68C
In most cases a valid election or statement will have been made under TCGA92/S62 (7) orCGTA79/S49 (7), see CG31600. The Revenue had always considered that Section 62(7) wasconcerned with computational matters only, and had no effect on the question whether a newsettlement had come into existence or the identity of the settlor. The majority of theHouse of Lords, in Marshall v Kerr, 67TC56, preferred slightly different reasoning inholding that a residuary legatee, who had executed an instrument of variation so that her50 per cent share of the estate was settled, was the settlor for the purposes ofTCGA92/S87 (charge on beneficiaries of non-resident settlements). It may be noted that thecase was concerned with the pre-1978 version of the relevant legislation and it isconsidered that the Revenues arguments in that case are stronger under the laterlegislation.
Where the instrument was executed before 6 April 2006 this decision should be applied forthe purposes of TCGA92/S77 & TCGA92/S86 (charge on settlors of certain settlements)and TCGA92/SCH1 (annual exempt amount for trustees).
Where the instrument was executed on or after 6 April 2006 and notice is given underS62(7) TCGA92/S68C applies with these consequences.
- Where under the will or intestacy property was to pass absolutely to an individual, and a variation is executed settling that property (or property deriving from that property), then the person to whom the property would have passed is the settlor with regard to that property.
- Where under the will or intestacy property was to be settled, but the variation is such that a new settlement is created (see CG37887) then the deceased is the settlor.
- Where under the will or intestacy property was to be settled, but the variation is minor, then the deceased would be the settlor without the new legislation in FA 2006 and therefore this case is not provided for specifically.