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Inheritance Tax and Deed of Variance/Revoking annuity issue

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csab63 | 19:40 Tue 15th Dec 2009 | Law
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My father died in Feb09 and left a quarter of his estate (ie £50k) to generate £1200 pay income for his ex wife. My mother then died in June09. If the 50k goes into my mother's estate there will be £20k inheritanc etax to pay. Is there any way to avoid paying inheritance tax? Deed of Variation or revoking the annuity have been mentioned as possible ways to proceed. Can we apply for probate on my mother's esate without this issue being resolved?

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Yes you can apply for probate without the issue being resolved.

Just let me get a few things straight - did he actually purchase an annuity? Or was it simply a life interest in a lump sum? Are your father's ex wife and your mother the same people? Were they actually divorced or just separated? If your mother and father were still married at dod, can you not roll up the two nil rate bands.

Sorry, perhaps I am being thick after a long and difficult day, but if you can clarify it it would help. Tbh, the net amounts of both estates and the terms of each will (broadly speaking) would assist together with the value of lifetime gifts since there may be other ways round it and you really need to know the full picture when thinking about a DoV.
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It was simply a life interest in a lump sum. The will says '1 My trustees shall invest the said part or share (the Turst Fund) in or upon any investments hereinafter authorised for the investment of trust funds with power to vary and transpose the same. 2. My trustees shall pay out of the iinteres from the Trust Fund the sum of £1200 to my former wife during her lifetime such payments to be made by equal quarterly payments in advance. 3. Subject thereto my Trustees shall upion the death of my former wife hold the Trust Fund as to both capital and income for my daughter (me) So yes my father's ex wife and my mother were the same person. Tthey actually divorced 40 years ago so were not married at dod.

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