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Post Death Arrangments Notes

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The way in which an estate is left on death is not final. Beneficiaries and trustees can redirect dispositions of property in an estate following death, e.g. to provide for family members who may be less well off than the beneficiary, or to save tax, usually IHT.
 A beneficiary passes assets they have been left in a will to other people in accordance with a record of wishes left by the testator.
 S.143 IHTA 1984: provided the beneficiary carries out the wishes within 2 years of death, IHT is charged as if the property had been
Trusts left in accordance with the wishes of the deceased.
 S.144 IHTA 1984: if property is left on discretionary trust and an appointment, which would have led to an IHT charge, is made within 2 years, there is no exit charge on the appointment and instead the appointment is, in effect, read back into the will.
Wills Creating
 Advantages:

Effective two-year survivorship period available

No consents required

No election required (although it is usual to include an express election)
 No one can be forced to accept a gift - beneficiaries can thus disclaim, but whole of the gift must be disclaimed.
 There is an automatic reading back for tax purposes*.
 The property passes in accordance with the will or intestacy and the original beneficiary has no control over who will ultimately benefit.
 If a beneficiary does accept a gift, they are free to dispose of that property as they think fit - they can vary entitlement to that property (at any time).
 BUT if the property is accepted and then re-routed, there could be adverse tax consequences:

PET for IHT purposes, so if they die within 7 years, it will eat into NRB
o Disposal for CGT, so if the asset has increased in value since death, there could be an immediate charge to CGT
* Reading Back for Tax Purposes → separate elections can be made for IHT and CGT
Inheritance Tax - s.142(1) IHTA 1984
Capital Gains Tax - s.62(6) TCGA 1992
Where within two years after a person's death, any of the dispositions of Similar provisions apply for CGT - effect:
the deceased's estate are varied or disclaimed in writing, they shall be read  It will not be treated as a disposal by the variator.
back and treated as though the variation had been effected by the  Shall apply as if the variation had been effected by the deceased, or in deceased, or in the case of disclaimer, as though the gift had never been the case of disclaimer, as though the gift had never been conferred.
 Consideration for the variation - s.142(3) IHTA 1984 & s.62(8) TCGA 1992:
o Reading back does not apply to a variation/disclaimer made for any consideration in money or money's worth other than consideration considering of the making, in respect of another disposition of the deceased, of a variation or disclaimer that qualifies for relief.
 Multiple variations:
o A particular item of property can only be redirected once.
o However, rectification of the original variation may be possible - Lake v Lake [1989].

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