Published guidelines: examples where the destination of property must be varied
Example 1 - redirection of a cash sum
Where the subject-matter of the redirection is expressed as a cash sum it will be payable out of the interest of, or will inevitably impinge on the value of the interest of, the person(s) who benefitted from the disposition under the deceased’s will or intestacy.
You may accept the instrument as a redirection of the property comprised in the death estate up to that amount or value, or total amount or value where more than one such sum is involved. It does not matter that, at the death, there were insufficient liquid assets (for example cash in hand or at bank) to provide that amount.
Any cases where the instrument of variation provides that a cash sum is to be paid out of property that qualifies for agricultural or business relief should be referred to Technical before commenting on the effectiveness of the instrument. Technical will consider the application of IHTA84/S39A if the cash gift is not actually satisfied from the relievable property during the course of the administration of the estate.
Example 2 - property not in the estate on death
It is possible that the subject-matter of the redirection is property which cannot be identified as forming part of the estate immediately before the death. For example, shares which may have been acquired by way of exchange or capital reorganisation of the company.
Where this applies, you should ask the taxpayer for an explanation of the discrepancy and, on receipt of their replies refer the case to Technical.
Example 3 - a lesser proprietary interest is redirected
Where the subject-matter of the redirection is some lesser proprietary interest than the property comprised in the deceased’s estate, (for example, a lease carved out of a freehold interest), you should refer the case to Technical.