How do we handle (or terminate) a nil rate band discretionary trust?

WideMan

My late father’s will nominated my mother as his sole beneficiary, but the will also provides for a nil rate discretionary trust. The will was written before the change to transferable IHT allowances between spouses, and as his estate is well below the individual IHT allowance it would now be easier if this provision was not there! Is there an easy way to get to a position where the whole estate can be transferred to my mother?

One of the issues is that we want to be able to sell the house, which was owned by my parents as tenants in common, so that my father’s half falls into his estate. We want to be able 1) to sell the house, and 2) to transfer the proceeds of my father's half to my mother.

Can anyone advise as to the best way to handle this situation, and what is the best sequence to follow? We would prefer to avoid substantial legal costs of possible!

Any advice would be appreciated.

wwl

I had this situation with my Father's will a few years ago.
After some searching I came up with the wording below for an instrument of variation, which I had a solicitor check. I included this with the probate application.

In my case it was simply to avoid the need for the trust as it was made superfluous by the change in legislation, there was no need to sell or anything so your situation may be different.
Probably wouldn't hurt to book a fixed-time session with a solicitor to discuss what to do, but probably not necessary to engage them to do more than just advise.

Instrument of variation

To the last will, made on 12th December 2005,

of <father>, Deceased 29th October 2009.

We the undersigned wish to make a variation to the abovementioned will to remove all provisions in clauses three and five thereby removing the gift of the “nil-rate sum” to a discretionary trust and thereby giving the entire estate to <mother>.

We certify that this instrument falls within category M in the schedule to the Stamp Duty (Exempt Instruments) regulations 1987.

The parties to this variation intend that the provisions of section 142(1) Inheritance tax Act 1984 and section 62(6) Taxation of Chargeable gains Act 1992 shall apply.


Signed

<mother> of <address>, (Spouse of the deceased and sole beneficiary, named executor of the will)




<executor 1> of <address> (Son of the deceased and sole surviving beneficiary of the will of <mother> Executor of the will of <father>


<exeutor 2> of <address> (Brother of the deceased, named executor of the will)

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WideMan

Thanks so much wwl for this quick and very helpful response! It sounds like just what we need. If it was OK for you then (unless the law has changed in the interim) it will presumably be OK for us.

This gives us some welcome hope that the way forward is less complicated than we were anticipating.

WideMan

A further thought / question ...

Do the signatures on the instrument need to be witnessed?

Thanks.

g6jns_2

WideMan wrote: »

A further thought / question ...

Do the signatures on the instrument need to be witnessed?

Thanks.

It would be very unwise to DIY this. If you get it wrong it could cost serious money. Pay a few hundred and get it done by a solicitor.

joerugby

The HMRC Instrument of Variation checklist does not mention the need for a witness.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/373615/IOV2.pdf

However, when I did one a while ago I got it witnessed just in case it proved necessary later

wwl

g6jns wrote: »

It would be very unwise to DIY this. If you get it wrong it could cost serious money. Pay a few hundred and get it done by a solicitor.

Like I said you should probably pay a few quid to get advice on what to do, but you may not necessarily need to pay a solicitor to actually do it.
When I did my father's probate I made a list of the things I was unsure of or that I wanted checked. Booked an hour with local solicitor firm's probate dept - don't recall how much it cost but under £100 I think.
Ran through it in half an hour and they only charged me for the half-hour in the end.
I got the impression they're not used to people doing this...

G6JNS

wwl wrote: »

Like I said you should probably pay a few quid to get advice on what to do, but you may not necessarily need to pay a solicitor to actually do it.
When I did my father's probate I made a list of the things I was unsure of or that I wanted checked. Booked an hour with local solicitor firm's probate dept - don't recall how much it cost but under £100 I think.
Ran through it in half an hour and they only charged me for the half-hour in the end.
I got the impression they're not used to people doing this...

Sadly there is still the possibility you will translate the advice wrongly. Get it actually done by a solicitor. That way you have insurance if it is done wrongly. DIY and you are on your own

WideMan

Thanks for all the replies. I will certainly as a minimum get advice from a solicitor, and then make a decision about whether I am sufficiently confident to go the DIY route.

wwl: am I right in assuming that the instrument you submitted was accepted with no problem?

G6JNS

WideMan wrote: »

Thanks for all the replies. I will certainly as a minimum get advice from a solicitor, and then make a decision about whether I am sufficiently confident to go the DIY route.

wwl: am I right in assuming that the instrument you submitted was accepted with no problem?

What you have to ask yourself is if you are prepared to take the risk of potentially costing your family ten of thousand of pounds for the sake of paying a few hundred to get the job done properly.

borkid

We have the same in place and I was thinking about changing but then thought if one of us has to pay for care in our old age at least half the estate will be safe.