Nil Rate Band Discretionary Trust

Yorkshireman99

SeniorSam wrote: »

Getmore4less, You may have missed the point that the property would pass to the spouse and then on to children (although I did not mention that).

Both have an interest to pass on as tenants in common, but if one were to leave a nil rate band allowance in Trust that was ABOVE the value of their 'other' assets, that could attract attention to deplete the RNRB allowance of the first to die.

With both NRB and RNRB, they could have £500,000 each from 2020. With Wills as they are at present, that allowance would be reduced. I had already suggested they seek advice from a STEP solicitor.

AIUI his form of trust is obsolete and it would be pointless to use one today

SeniorSam

I would never suggest that things were left as they are as the Discretionary Trust is no longer suitable. Those old Wills do need renewing hence the suggestion to seek advice.

As each have assets of £400k in their house and £150k of investments, the fact that there is a nil rate band Discretionary Trust in the Wills led me to question the allocation of more than the £150k, which, as now confirmed, would affect the property RNRB as part of the property would not then be gifted to direct family, but to the Trust.

Hopefully they will receive new advice and possibly consider a Will Trust gifting the property to their children with Lifetime interest for the survivor, thereby protecting that and retaining their individual NRB and RNRB.

getmore4less

There is plenty of property(£400k) left for both RNRB to qualify on second death.

This is not a Residential band issue it just transfers for the spouse to use on their property.

The RNRB does not get lost with the current set up, they both get used on second death.

SeniorSam

In the first part of the Will the nil rate band is gifted the DWT, but in this instance, that would take account not only of investment assets(£150k) but additionally £175k as being part of the house value to a Discretionary Trust. That would negate the RNRB part of the first to die leaving the spouse nil rate band and RNRB only, which is why the Will is poor. Sorry, I thought I had clarified this earlier.

getmore4less

SeniorSam wrote: »

In the first part of the Will the nil rate band is gifted the DWT, but in this instance, that would take account not only of investment assets(£150k) but additionally £175k as being part of the house value to a Discretionary Trust. That would negate the RNRB part of the first to die leaving the spouse nil rate band and RNRB only, which is why the Will is poor. Sorry, I thought I had clarified this earlier.

But that is not what happens.

The property is not transferred to a qualifying decendant.

The RNRB is not used on first death.

IT becomes transferable to spouse.

64jane

if the first spouse died - would all assets (valued around £400k) have gone into the trust? and would the RNRB be lost for the first spouse? (family home valued at £300k and half share £150k at time of probate). The will for the surviving second spouse has been changed to leave the remaining share of the family home to the daughter directly to avoid losing the allowance. Is there any value in keeping such a discretionary trust in place for the remaining assets of the 2nd surviving spouse to leave other assets into the trust? The final amount would be over £1m in value with assets of both parties included. The daughter is the beneficiary. Many thanks.