Ignoring an old trust to get full IHT allowance?

aps_el

I am about to apply for probate on the estate of my mother-in-law. The estate is big enough that we will have to pay inheritance tax.


Back in 2000 when her husband died her solicitor advised her to get a deed of variation on his will and set up a trust, mortgaged against her house, to take advantage of her husbands tax free allowance (£234k at that time). The trust was £209k in value and it was registered with HMRC.


In retrospect I can see this was the wrong thing to do because the law subsequently changed and his allowance could now be added to her own at the current rate when she died.
She sold her house before she died and the trust was would up and the money given to her daughter as she wished.


As far as we can see we can only claim for the percentage of unused allowance, multiplying that up by the current rate, which works out at about £35k, which on top of the £209k, is way short of the current allowance of £325k.


Is there anyway we could say the trust was invalid or cancel it retrospectively and bring the value of the trust back into her estate, so we can claim the full £325k allowance from her husband.


One reason I am asking is when we were in contact with the solicitor recently he implied that HMRC had ruled in recent years that some old style trusts were invalid and had gone after them for tax. Clearly if they did so in this case they would get less tax! but it did make me think the trust could possibly be revoked in some way.

getmore4less

No where near enough information for someone to comment.

Even then you would need specialist advice and research on top even if someone did have more info to work from.