The High Court has stepped in to cure an unfortunate drafting error so as to ensure that the wishes of a woman in her nineties are honoured and that four charities she favoured will receive her substantial bounty free of Inheritance Tax (IHT).
A pensioner (A) had died aged 97, leaving the majority of her estate, including a freehold property worth more than £400,000, to her sister (B). B died in the following year, leaving the residue of her estate to the Royal National Institute for the Blind and three well-known animal charities.
IHT was calculated at more than £250,000 on A’s estate and the combined effect of the sisters’ wills was to wipe out the charities’ entitlements. However, a solicitor later drafted a deed of variation which was intended to modify the terms of A’s will in such a way as to remove the IHT liability.
However, the deed as drafted did not achieve that objective in that A’s freehold property remained within the charge to IHT, thus defeating the entire object of the exercise. The solicitor, acting in her capacity as administrator of A’s estate and executor of B’s, therefore applied to the Court for rectification of the deed.
In granting that application, the Court found convincing proof that an error had been made and that the intent that lay behind the deed was clear. HM Revenue and Customs were the only party that would be adversely affected by the rectification but had not opposed the application.