IHT – rectification of a Deed of Variation

A will may make the best, and most tax effective, provisions for the testator’s beneficiaries at the date when the will was drawn up. However, in the circumstances prevailing at the date of the testator’s death it might be clear that the position can be improved upon. Where all the beneficiaries are of full age the obvious route to take will be an agreed variation complying with the requirements of s142 IHT Act 1984 and s62 (6) TCGA 1992. Invariably the variation will be effected by deed though of course the legislation only requires it to be made by an instrument in writing. A legal document is therefore required. There is always the risk that an error will be made in the drawing up of the document. The error may be corrected by agreement between the parties, but where the error had led to an unexpected increase in the IHT liability, and the error will reduce the IHT payable, it may be necessary to apply to the Court for a formal rectification of the original instrument. This is what happened in Aschcroft v Barnsdale [2010] EWHC 1948 (Ch).