Life interest, trust, IHT etc

onomatopoeia99

My parents were married  Dad died at the end of last year, his will left his half of their house (tenants in common, 50/50 split with mum)  to the trustees of a trust created by the will. Me, my brother and my mum are the trustees, and the trust grants mum the right to live there rent free until she dies, then the trust goes to my brother and I.  It's described as a "property protection trust" in the will which seems to be the same as an "immediate post death interest trust" from what I can gather, and therefore should qualify for the residence additional IHT threshold.

I'm doing probate, and what I'm struggling with is how to record the value of this part of the house for the purposes of IHT .   Since it's going into a trust that allows mum to live there, does it even form part of the estate at this point, or does that wait until mum dies as well so the trust ends?

The example in section 3 at https://www.gov.uk/guidance/trusts-and-inheritance-tax is almost analogous except the trust containing the property in the example is left to the wife, whereas ours is left to three people as me and my brother are also trustees, which is why I'm uncertain as it looks like it's not simply inheritance between spouses.

I'm sure I can't be the only person to have ever encountered this, but I haven't been able to anyone describing the same situation.

Keep_pedalling

The trust will not use any of the RNRB as you mother is the beneficial owner of his share so it is covered by spousal exemption. On her death the full value of the house forms part of her estate but her executors can claim the transferable RNRB and any unused NRB from your father.

There will also be no CGT issue for you when the property is eventually sold.

RAS

Does dad have any other large assets? Or National Savings Certificates?

You may not even need probate at this juncture

onomatopoeia99

Keep_pedalling said:

The trust will not use any of the RNRB as you mother is the beneficial owner of his share so it is covered by spousal exemption. On her death the full value of the house forms part of her estate but her executors can claim the transferable RNRB and any unused NRB from your father.

There will also be no CGT issue for you when the property is eventually sold.

That's clear, thank you, I think I'm able to complete the (online) form now as that was the last thing I was unsure about.

To answer the other reply, we definitely need probate.  While the estate (even if it included the share of the house) would be under £500k, there are accounts which have more in them than the bank's threshold to hold the funds until probate is granted.