Upon visiting a professional forum recently we came across a question from a solicitor whose client wanted to leave, under his Will, property to an individual but to include a term in the will that the bequest would be void if the beneficiary entered into a deed of variation, one presumes of the Will concerned, within two years of the testator’s death.
One might think that this was a rather peculiar wish on the testator’s part. After all, a legatee, or devisee, under a Will can make an outright gift of the property he receives under it to any person whom he wishes. Why should it matter if the gift is made by way of a deed of variation?
Nonetheless, various responses to the question were made suggesting wordings such as the following to achieve the wish of the client:
‘I declare that any person who would otherwise benefit under my Will who is party to a variation of my Will within two years after my death shall be excluded from receiving any benefit under my Will and my Will shall take effect as if no provision had been made to benefit that person’.
The question raises the fundamental question of what is the legal nature of a variation of a Will?
Nobody but a testator can actually vary a Will and then only by revoking it, wholly or in part. Typically he will do this by making a new Will which expressly revokes all previous Wills.
The variation of a Will by a beneficiary, in contrast, is only a fiction adopted, for the purposes of Inheritance Tax (under IHTA 1984 s. 142) or Capital Gains Tax (under TCGA 1992 s. 62(6)), in respect of the actual dispositions actually made by the beneficiary. Most ‘variations’ of a Will, therefore, involve the recipient of the bequest or devise making a gift, either outright or on trust, of the property to which he has become entitled under the Will and that disposition being treated for IHT and, or CGT purposes as if it had been made under the Will which contained the bequest or devise.
A simple exclusion under the terms of the Will of a beneficiary benefitting under it if the beneficiary makes ‘a variation’ of it, therefore, is likely to fail on the grounds that its meaning is uncertain or at least, if the property at stake is sufficient, to lead to years of legal wrangling.
One might achieve the effect desired by the enquirer’s client by referring specifically to transactions within the relevant fiscal provisions. To adapt the wording above, the Will might provide that:
‘I declare that any person who would otherwise benefit under my Will who effects a disposition of the property comprised in my estate immediately before my death to which Inheritance Tax 1984 s. 142(1) applies [and, or, to which Taxation of Chargeable Gains Act 1992 s. 62(6) applies] shall be excluded from receiving any benefit under my Will etc’.
In this way one is not referring to a fictitious transaction, varying a Will, but to one defined by the application of specified legislation to a transaction which actually takes place, the disposition by the beneficiary.
