Tax Efficient Variations and Disclaimers

FROM THE TAXPAYER’S point of view section 142 Inheritance Tax Act 1984 has been and will continue for some time at least to be one of the most useful and popular sections in the inheritance tax legislation because it allows a two-year breathing space in which to re-write the provisions of the deceased’s will or the passing of property on intestacy. It is indeed useful but it needs approaching with care as there are hidden snags.

Section 142 operates where within a period of two years after the individual’s death the destination of any of the assets of his estate (excluding assets charged under the reservation of benefit rules) passing by will intestacy or ‘otherwise’ is varied or altered or the benefits disclaimed by an instrument in writing made by the original beneficiary or beneficiaries. Furthermore from 1 August...