Discretionary nil rate band will trust and RNRB allowance

johnnycricket

I understand that:

Your home won't qualify for the £175,000 main residence allowance if it's in a 'discretionary will trust', even if the beneficiaries of the trust are your children or grandchildren. 

I have a mirror will (with my wife) set up as a discretionary nil-band trust. We both have children by previous marriages and want to ensure some money goes to our children.

My question is that if the £175,000 doesn’t qualify for the discretionary trust can it be added to the survivor’s IHT allowance as would be the case without a discretionary trust?

Keep_pedalling

Are you sure these are discretionary trusts rather than immediate post interest trusts, which would be a far better option. Discretionary trusts should normally be avoided to the high level of management required and the tax treatment applied to them.

If they are I would be getting new wills made ASAP.

DRS1

johnnycricket said:

I understand that:

Your home won't qualify for the £175,000 main residence allowance if it's in a 'discretionary will trust', even if the beneficiaries of the trust are your children or grandchildren. 

I have a mirror will (with my wife) set up as a discretionary nil-band trust. We both have children by previous marriages and want to ensure some money goes to our children.

My question is that if the £175,000 doesn’t qualify for the discretionary trust can it be added to the survivor’s IHT allowance as would be the case without a discretionary trust?

I think when people set up nil rate band discretionary trusts in their wills they don't imagine the house will be part of that trust.  Obviously I don't know the make up of your estates but is the house specifically mentioned as being in that trust?  Or is it left direct to the surviving spouse/the children?

johnnycricket

Yes the current house or my main residential house for iht purposes

johnnycricket

Sorry the house is specifically mentioned as being in the trust

DRS1

It may be a good idea to go to a solicitor who belongs to STEP with copies of your wills a statement of assets for each of you and details of the families/beneficiaries and discuss whether the wills are still a good idea.

Or perhaps whoever produced the wills wrote to you explaining how they worked and why they have the house in the trust?

johnnycricket

Thanks for your advice