Your firm has been asked to provide advice in connection with inheritance tax and capital gains tax following the death of Cada. The advice relates to the implications of making lifetime gifts, making gifts to charity, varying the terms of a will and other aspects of capital gains tax planning.

Cada and her family:
– Cada, who was UK domiciled, died on 20 November 2014.
– Cada is survived by two daughters: Raymer and Yang.
– Raymer has an adult son.

Raymer:
– Is not an accountant, but has some knowledge of the UK tax system.
– Has made four observations regarding her mother’s estate and her inheritance.

Raymer’s four observations:
– ‘My mother should have made additional gifts in her lifetime.’
– ‘The tax rate on the chargeable estate should be less than 40% due to the gift to charity.’
– ‘I do not intend to live in the house but will give it to my son on 1 July 2015.’
– ‘My mother paid capital gains tax every year. However, when she died, some of her shareholdings had a value of less than cost.’

Required:
(c) Explain the capital gains tax and inheritance tax advantages which could be obtained by varying the terms of Cada’s will and set out the procedures required in order to achieve a tax-effective variation. (6 marks)