Death doesn't always have to fix who inherits. Beneficiaries can redirect what they receive, families can resolve uncertainty about entitlements, and the court can step in where someone has been left without reasonable provision. For a solicitor advising a bereaved family, knowing these tools — and the tax consequences of each — is the difference between a clean, tax-efficient result and an avoidable inheritance tax bill.
The key idea is 'reading back': done correctly, a variation is treated for tax as though the deceased made the gift, so the original beneficiary isn't taxed on passing it on. But the conditions are strict, and getting them wrong is costly.
What this lesson covers:
- Deeds of Variation and Reading Back — the main types of post-death arrangement and what 'reading back' means for tax.
- Requirements for IHT Reading Back (s.142) — the four conditions a variation must meet to qualify.
- Parties and Tax Consequences of Variations — who must sign, where property can be redirected, and the IHT effect.
- Distribution Agreements — how confirming existing entitlements differs from redirecting them.
- Court Orders and Claims Under the 1975 Act — who is eligible to apply for provision from an estate.