Inheritance Tax and Nil Rate Band Discretionary Trusts

edsredshed

Hi, I was hoping that someone in this forum might be able to help me with a question that I have relating to Inheritance Tax and Nil Rate Band Discretionary Trusts.

 

My Mother died in November 2023 and in her will has passed everything to my brother and I.

 

We are hoping to take advantage of my fathers unused nil rate band allowance.

 

In my father will – written in 2006 – it specified the creation of a “Nil rate band discretionary Trust Fund” with the trustee being my mother and a Law Firm. My mother was listed as a sole recipient of personal Chatels and my mother, me, my brother, and my 2 cousins were listed as Beneficiaries. No other specific instructions were provided in the will.

 

In a letter included alongside the will, addressed to the “trustees of my will” it stated that my mother would be the primary beneficiary and that GBP10k each should be given to each of my 2 cousins.

 

My father died in 2010.

 

I am in the process of completing the IHT402 form and wanted to make sure that I complete the form correctly.

 

Should I simply complete it with the GBP20k reduced from the GBP325k giving me GBP305k transferrable nil rate band or does the creation of the Trust add more complexity that I need to be aware of.

 

Thanks in advance for any help.

Keep_pedalling

That was unfortunate timing as the NRB trust was made obsolete by the introduction of the transferable NRB in 2007. As your father’s NRB was passed to a trust it is not available to be transferred unless a deed of variation was done within 2 years of his death to pass it to your mother instead.

His RNRB is still available to transfer even though it did not exist at the time of his death.

edsredshed

Thanks Keep Pedalling.. not the answer I was hoping for but very helpful nevertheless. I will take a look through my mothers papers and see if I can find a deed of variation. Otherwise good to know re RNRB. Thanks 

Marcon

edsredshed said:

Thanks Keep Pedalling.. not the answer I was hoping for but very helpful nevertheless. I will take a look through my mothers papers and see if I can find a deed of variation. Otherwise good to know re RNRB. Thanks 

If your mother's will was drawn up by a solicitor (especially if it's dated 2007 or 2008), ask them if they have any info/a copy of the deed of variation. Bit of a long shot, but worth a go.

Keep_pedalling

Marcon said:

edsredshed said:

Thanks Keep Pedalling.. not the answer I was hoping for but very helpful nevertheless. I will take a look through my mothers papers and see if I can find a deed of variation. Otherwise good to know re RNRB. Thanks 

If your mother's will was drawn up by a solicitor (especially if it's dated 2007 or 2008), ask them if they have any info/a copy of the deed of variation. Bit of a long shot, but worth a go.

I think the biggest clue would be the trust. If a DoV had been done there would be no trust.