Rectification of a Deed of Variation

In ‘From the Courts’ on page 3 there is a note of the High Court Decision in Ashcroft v Barnsdale [2010] EWHC 1948 (Ch). This was a case in which the Court ordered rectification of a will. Under the will, as originally drawn, a (relatively) small pecuniary legacy, and farmland were left to the testatrix’ husband, and the residence was left to the children. It was realised that, following the testatrix’ death, there would be a large IHT liability since the residue left to the children contained substantial investments, which did not qualify for the agricultural and business property reliefs, but that farmland which, potentially, could qualify for the reliefs was exempt from IHT by having been left to the husband. It was agreed that the will should be varied, so as to leave a £410,000 pecuniary legacy and the farmland to the children while the residue was left to the husband. Under the will, as originally drawn, a substantial amount of IHT was payable and would be borne by the children, out of the property left to them. No IHT liability would have fallen on the husband. Under the Deed of Variation as executed by the parties, there would have been an IHT liability as a result of the legacy left to the children. The parties argued, and the Court accepted, that it was intended that the IHT should still be met by the children, but unfortunately the legacy left to them was not, expressed, in the Deed of Variation, to be ‘subject to tax’.