Instruments of Variation: introduction
In general law a variation takes effect from the date of the instrument. If it gave rise to a loss to someone’s estate there will be a transfer of value. However if the instrument satisfies the conditions of IHTA84/S142 it will be treated for inheritance tax purposes as if the redirection of property that formed part of the deceased’s estate (IHTM04029) had been made by the deceased. Where this applies the redirection of property is not a transfer of value (IHTA84/S17 (a)).
In our view the word ‘disposition’ as used in IHTA84/S142 (1) refers
not to the content of the provision appearing in the will (or other relevant dispositive instrument or statute), but
- to the result of applying that provision
so that the focus is on the post-death beneficial interest.
Accordingly the instrument of variation must change the destination of property in the estate from that prescribed by the disposition which originally applied on the death.