Ineffective variation

Mrs G died in March 2004. She left a pecuniary legacy of £25 000 to her sister and the rest of the estate to her husband. Her husband died in June 2004.

In December 2004 the beneficiaries purported to execute a deed of variation clause 1 of which was a lifetime gift of the couple's house to her sister before the deemed transfer of value on her death and clause 2(3) made a pecuniary legacy of £230 000 to nieces and nephews.

HMRC issued a determination under IHTA 1984 s 142 agreeing that the deed was effective and that the benefit of the nil-rate band was to be set against the property.

The personal representatives argued that the house was then no longer part of the estate because IHTA 1984 s 17(a) stated with reference to 'Changes in distribution of deceased's estate etc' ...