Life Interest Will Trust and ISA’s

Hitting

I understand that an ISA(s) can be inherited by a surviving spouse without loss of it ISA status......if this is correct can it apply in the following situation?

In a Life Interest Will Trust (Mirror Wills) the spouses are both Executors and Trustees.,and as such benifit in exempting themselves from Care Home fees through the main purpose of the L.I.W.T.....
whereas the first part of the Will refers to aforementioned the second part states ‘My Trustees shall hold the residue of the estate on trust to pay income thereof to my husband and the Trustees may lend any part of estate to my said husband..........etc.
This residue includes investment ISAs, and what I was wanting some clarity on,was ...if a loan note is made by the Trustee loaning the ISAs to my husband, ie he inherits the deceased ISAs via this route do these ISAs still retain their ISA status referred to in 1st para?

Hitting

Sorry,...maybe should have mentioned...the the first part of the Will refers to protecting the sale of residence from Care Home fees....

xylophone

I understand that an ISA(s) can be inherited by a surviving spouse without loss of it ISA status.

https://www.which.co.uk/money/savings-and-isas/isas/cash-isas/can-you-inherit-an-isa-av3zk0s5ud6q

Anyone whose spouse or civil partner died on or after 3 December 2014 is eligible for a one-off additional Isa allowance equivalent to the value of the deceased person's Isa at the time of death.


This is referred to as an 'additional permitted subscription' or APS allowance.

Say, for example, that you'd saved up £50,000 in your Isa when you die. Your spouse will be able to make an additional contribution to their Isa of up to £50,000, in addition to their own annual Isa allowance - which is £20,000 in the 2018-19 tax year. This allowance will remain at £20,000 in the 2019-20 tax year.

This allowance is regardless of what's in your will. Which means that even if the money is left for someone else to inherit, such as your son or daughter, your partner is still entitled to an increased allowance equivalent to the value of your Isa assets.

So if you left £50,000 worth of Isa assets to your child, your partner would still be entitled to an increased Isa allowance of £50,000, although they would be using their own money to fund it.

Hitting

Thank you,...and interesting.....I think you have alleviated my concerns!

In my situation I was concerned that the Will has the Trustees taking over the deceased ISAs,....and not the surviving spouse...however this has no bearing on there ISA status, in that although the surviving spouse does not inherit deceased ISAs,...the surviving spouse does not lose, what I have called ISA status, but in fact should be referred to as ‘an additional ISA allowance’, equivalent to the value of the deceased ISAs....is this correct?

How long is this ‘additional ISA Allowance valid for?........if death occurred say April 4th/5th,is it valid in the following tax year?

xylophone

‘additional ISA Allowance valid for?

https://uk.virginmoney.com/virgin/isa/aps-allowance/

https://www.hl.co.uk/investment-services/isa/additional-permitted-subscription-aps#What

Hitting

Thank you that was very informative.

I currently have a mirror life interest will trust, which protects assets from being siphoned into Care Home costs,but I’m now becoming hesitant in whether I want my assets to be held by trustees rather than sole me!...and perhaps the drawn out procedure of having to get a loan from the trustees to allow my spouse to use my assets to implement APS.
If I were to sacrifice the protection benifits aquired with life interest will trust, would I lose anything else if I tried to arrange a simple mirror Will, which would hopefully make inheritance much easier?...I would still want to use the APS aspect with ISA investments

Hitting

One further point......with a simpler Will I was hoping not having to make use of a Solicitor!