Discretionary Will Trust

Bobziz

Hi,

So my Dad has just passed, leaving a NRB discretionary Will trust written in 2002, with his surviving spouse and 3 children as executors, beneficiaries and trustees. Spouse lacks mental capacity and is in a nursing home. Property is owned as tenants in common.

Question - dad wanted to prevent his estate, worth Ca. £490k, from being used for care home fees. Mum has a substantial estate herself which can be used if necessary. My assumption is we'll need to use a variation of appointment to close the trust to benefit from his RNRB. Can we do this in a way that prevents part or all of his estate going to his spouse ?

Many thanks in advance.

Keep_pedalling

Your cannot do a DOV that reduces his widow’s inheritance, only she can do that and only if she has the mental capacity to do so. NRB trusts became obsolete after Gordon Brown introduced the ability to transfer NRBs between spouses, so this should be treated as a lesson on why wills should be reviewed periodically.

Bobziz

thank you. Thats what I feared. So best option is to leave the trust in place and take a £66k IHT hit but protect the remaining estate ?

Keep_pedalling

Bobziz wrote: »

thank you. Thats what I feared. So best option is to leave the trust in place and take a £66k IHT hit but protect the remaining estate ?

Impossible to say on the information given. Is it really likely that she will exhaust all of her own assets to care costs? You say she has substantial assets so unless she is expected to survive well over the average time people spend in care homes?

Personally I would risk that happening because I would never want to be dependant on someone else having to fund my care, and therefore not want my nearest and dearest to be in that position either.

getmore4less

Any unused residential nil rate band will be transferable.

How much and what is going into the trust?

Bobziz

thank you. So would you do a DOV to leave the full value of the property to my mum outside of the trust, and then leave other assets in the trust ? this way she benefits from his RNRB and no IHT would be payable. Risk is that the local authority can then access this money for care costs. Worst case scenario is a reduction in the estate of £250k to cover care costs rather than £66k via IHT.

Mums lived with Alzheimer's for about 8 years, has her own funds to cover another 4.5 years, is 87 years old and in relatively good physical health. Those suffering with this disease have been known to live with it for 20 years.

Bobziz

getmore4less wrote: »

Any unused residential nil rate band will be transferable.

How much and what is going into the trust?

so my understanding was that you can't use the RNRB if the house is left to a trust rather than a spouse or blood relative.

£250k as a share of the property and £240k in cask, bonds etc goes it to the trust.