Discretionary Trust (Nil Rate Band )

milla · 8 March 2005 at 6:14PM

' Discretionary Trusts: If the right thing to do for inheritence tax planning is leave assets to your children, yet this could leave your spouse in a difficult postion. Then you could leave the Nil-Rate Band in a discretionary trust. This will allow your spouse access to the income and capital of the trust, as if it were his or her own, but the value of the trust does not form part of your spouse's estate when he or she dies. Payments can be made to other beneficiaries if your spouse agrees.' ( Quoted from Martin's article )

Could anyone tell me ... does that mean that a couple need to put 2 x £263.000 (i.e. £526.000 ) into a(two) trust fund(s) if there are mirror wills ?

Please be gentle ..I seem to have a block on this one !! Some sort of example might help !!!

milla · 9 March 2005 at 4:13AM

Paul

Thanks for your thoughts.

As you are aware, my personal circumstances are a little more complicated as my mother died last July and we (Dad and I ) are considering a 'Deed of Variation' (to be put into effect within 2 years of the first death )so that we can take advantage of the discretionary nil rate band which would indeed save a lot of IHT.

I think from your comments that you are saying that only (!) one lot of £263.000 needs to be allocated to a trust?

Thanks again

JayS_3 · 9 March 2005 at 3:05PM

Paul

You have a pm

Jay S

milla · 9 March 2005 at 4:02PM

Again thanks to Paul for getting me through this fog!

A few more questions !

Do the rates for the trust vary and, if so, how do we find the best rate ?

Could you move the money from one trust to another or, is it a case of once you have set up a trust that is it for good?

If we set up a trust with , for example , Halifax or a solicitor then what is their interest in it (i.e will they charge commission ) ?

Does Dad still retain complete control (that is what we would want ) ?

Can he still use the money at any time (say he wanted to go on a world cruise !!) ?

It does seem to be getting a bit clearer now !

Regards

milla · 9 March 2005 at 8:02PM

Quote:
Originally Posted by milla
Do the rates for the trust vary and, if so, how do we find the best rate ?

(Paul) By rates, what do you mean? Do you mean the charges levied for setting up a trust or the amount of tax on income from the trust or the amount of IHT that may be payable during the lifetime of the trust?

(milla) I meant the interest rates on the sum in the trust.

Quote:
Originally Posted by milla
If we set up a trust with , for example , Halifax or a solicitor then what is their interest in it (i.e will they charge commission ) ?

(Paul )Again, my understanding is they would charge a fee to create the trust. They may also take commission from any investments they advised your dad to buy which are placed in trust. They would also charge a fee if they were named as executors of the trust.

(milla )I don't understand 'executors of the trust '

Thanks again Paul

You have pm

Paul_Varjak · 10 March 2005 at 1:01AM

Sorry Milla!

A Solicitor would charge:

1. For writing the Will.
2. For being an executor of the Will (if you wish them to be an executor)
3. For being a trustee of any trust created by the will (if you wish them to be a trustee)

Discretionary Trust (Nil Rate Band )

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