Property redirected to the spouse or civil partner: variations and joint property
In cases where the estate contains both assets owned wholly by the deceased and joint property passing by survivorship the instrument of variation (IoV) may refer only to property passing under the deceased’s will. If this property is insufficient to cover the legacies proposed under the IoV then any of the property passing by survivorship which is used in satisfaction of those legacies will not attract the protection of IHTA84/S142 and will therefore be a potentially exempt transfer.
If the IoV meets all the usual criteria, you may accept that it is within IHTA84/S142(1), but when writing to the taxpayers you should point out that there are insufficient funds passing under the will (including any property held as tenants-in-common) to meet the legacies proposed under the IoV and ask them how they intend to satisfy the legacies.
If the taxpayers propose another IoV to redirect the relevant proportion of the survivorship property then, provided the new IoV meets all the other criteria it too may be accepted as within IHTA84/S142(1).
Alternatively, if the taxpayers are content that the effect of the IoV is limited to property passing under the will and that any transfer of survivorship property is a PET, you need do nothing more than put a cross-reference on ALF for the surviving joint owner.
Any other circumstances should be referred to Technical.