IHT - Residence nil rate band - Does the residence have to be specified in the will?

malcolmK

Evening,

 

I can't find the answer to this, hopefully others can help.

In order for the IHT residence nil rate band to apply does a will have to explicitly state that the person’s home itself is going to an eligible party (e.g. a child) or is it sufficient just to say that an element of the estate is going to the eligible party?

Maybe an example would help. If someone had an estate worth say £500,000 made up of cash of £325,000 and a house of £175,000 and the will said "£100 is to go to the person next door and the remainder of my estate is to go to my child", would the residence nil rate band apply?  Alternately would the wording need to say something like "£100 is to go to the person next door and the remainder of my estate, including my house, is to go to my child"?

[Deleted User]

The IHT is based on the value of the estate, not what it states in the will as to who are the beneficiaries. 

theoretica

malcolmK said:

Maybe an example would help. If someone had an estate worth say £500,000 made up of cash of £325,000 and a house of £175,000 and the will said "£100 is to go to the person next door and the remainder of my estate is to go to my child", would the residence nil rate band apply?

Yes.        

MovingForwards

Naming a residence estate, rather than 'their home', to go to a beneficiary is the the worst thing to do.

If that property is sold and the testator (person whose will it is) purchased a new property, the beneficiary gets nothing unless they're named to get the residuary estate (leftovers after all debts, gifts etc have been distributed) as the original property wasn't owned on their death.

Keep_pedalling

It is usually not a good idea to specify a property in a will as there is a good chance you may no longer own it at the time of your death. For example if your will left your home to Jill and your cash to Jack, but your house had to be sold because you needed residential care Jack would end up inheriting 100% of your estate.

As long as you have left the bulk of your estate to direct descendants and the estate is of sufficient size the RNRB can be claimed, it can even be claimed if the house has had to be sold and you move into alternative accommodation such as with family, sheltered housing or residential care.

Your solicitor will advise you on what you need to include in your will to cope with various what if situations, please don’t attempt to DIY your will, it is too important for that.