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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. This is particularly popular when husband and wife, or civil partners (IHTM11032), die within two years of each other. You should make sure the files are worked together and note the effect of the IoV on both deaths on form IOV1. It is not essential that a grant of representation has been obtained to either estate, but see IHTM35032.


H dies leaving their estate to W absolutely. W dies 6 months later. The beneficiaries of W’s estate can make an IoV within two years of H’s death, redirecting property away from W so that it is no longer part of W’s 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 W’s beneficiaries may be to themselves directly or to others. We do not regard a redirection by W’s beneficiaries to themselves directly as infringing the requirement to change the destination of the property. (IHTM35025) Though the final destination of the property in the hands of W’s beneficiaries may not in fact be changed by the variation, the variation is still regarded as effecting a change in the disposition of the property in H’s estate.

If, in the example above, W 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 W that right terminated. So when an IoV is executed after the death of W 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 TG.