This exemption applies when property is left to another person in a will or on intestacy (i.e. the deceased person did not make a will). The exemption includes property that has outstanding debt on it, for example a mortgage. However, the transaction is not an exempt transaction if consideration is given for the property (other than the assumption of secured debt i.e. debt which immediately after the death of the person was secured on the property).
See also the rules in relation to chargeable consideration (LBTT2011).