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HMRC internal manual

Inheritance Tax Manual

Who should make the instrument?: dead beneficiaries

The beneficiaries of a person who has died may make a variation redirecting that person’s entitlement on an earlier death.  The variation must be within the two-year period following that earlier death.  Before the introduction of the transferable nil rate band this was particularly popular when a married couple, or civil partners (IHTM11032), died within two years of each other to make sure each estate gained maximum benefit from the nil rate band.  You should make sure the files are worked together and note the effect of the instrument of variation (IoV) on both deaths on form IOV1.  It is not essential that a grant of representation has been obtained for either estate, but see IHTM35032.


Harriet dies leaving her estate to Walter absolutely.  Walter dies 6 months later. The beneficiaries of Walter’s estate can make an IoV within two years of Harriet’s death, redirecting property away from Walter so that it is no longer part of his estate for IHT purposes.  Most commonly this will be of an amount up to the threshold so that the two estates each gain maximum benefit of the nil-rate band. 

In such cases, the redirection effected by the IoV made by Walter’s beneficiaries may be to themselves directly or to others. We do not regard a redirection by Walter’s beneficiaries to themselves directly as infringing the requirement to change the destination of the property (IHTM35025). Though the final destination of the property before and after the variation may not in fact have  changed, the variation is still regarded as effecting a change in the disposition of the property in Harriet’s estate.

Had Walter died near to the end of the two year period after Harriet’s death, it may not have been possible or practical for the IoV to actually be signed by Walter’s beneficiaries. In such circumstances, you may accept an IoV that has been signed by the executors alone, but only if they can, at some later time, provide written evidence from each of Walter’s beneficiaries that are affected that they agree to the variation. This relaxation was published in Tax Bulletin 15 and 74. Where the beneficiaries have not signed the IoV, it is not sufficient that the document recites the beneficiaries’ consent; separate written signed consent from each beneficiary is required.   

If, in the example above, Walter was left a life interest (IHTM35044) the ‘property’ was the right arising under the trust - that is the right to income.  On the death of Walter that right terminated.  So if an IoV is executed after Walter’s death there is no property in existence that can be redirected.  You should reject an IoV seeking to vary the interest of a deceased life tenant.

However, you should let the parties to the IoV know that if it is possible for the life tenant’s personal representatives (IHTM05012) to disclaim the life interest (IHTM35165) as a matter of general law, then you may accept the IoV as a disclaimer of a life interest.

You should refer any case where the taxpayers will not accept this view to Technical.