IHTM35044 - Who should make the instrument?: limited interests

Where the original disposition is of a limited interest, such as a life interest, each beneficiary can make an independent variation relocating all or part of their beneficial interest in the property. But where an instrument purports to relocate the entire beneficial interest in the whole of the property, all persons with original limited or residual beneficial interests in that item will need to be parties to the document. Cases which involve dealings with only some of the beneficial interests and/or part of the property subject to them therefore require particularly careful scrutiny to ensure that all necessary parties are joined. You should refer any doubtful cases Technical. You should not accept a variation which seeks to redirect a life interest after the life tenant has died (IHTM35042) as qualifying for relief under IHTA84/S142 (1).

A variation which may fail at some future time can none the less qualify for immediate relief under IHTA84/S142 (1). If the immediate trusts, as varied, are valid but a gift over may fail, for example, because it may be in breach of trust, any relief immediately due can be allowed. It is sufficient in such a case merely to draw the taxpayers’ attention to the possible future failure.