Discretionary Trust, NBR and 10 year charge

AKW

Hello Forum,

I don't understand the concept of NRB available to the DTrust. When there are two settlors, are there two NRBs available to the trust when it is set up?

poseidon1

Have you already  obtained  professional advice, and the adviser put forward the idea of discretionary trust for the main house rather than an outright gift to your Son? If so is this a case of you not understanding what you were told?

I struggle to understand why you would even contemplate something as complicated as a  joint  settlor discretionary trust when a straight forward gift achieves your immediate objectives and avoids future IHT assuming you both survive 7 years. As for the 7 year survival aspect a suitable term assurance policy would safeguard your son in that regard. 

As for the residence nil rate band that comes into play for your replacement property, subsequent to your outright gift of the main house. So again subject to surviving 7 years you retain both your NRBs together with both RNRBs.

I could go into the complications and pitfalls of a discretionary trust of the main house, but see no point unless there are very specific and compelling reasons why you cannot make a simple outright gift to your son ( something you appear to have been willing to do in the past).

Incidentally, and in passing I see  from posts you made a few years ago that although you  have an accountant, there is a tendency to seek clarity on complex tax planning maneuvers on this forum. Perhaps you need a better tax adviser?

Keep_pedalling

I also cant see why you would go with a trust rather than an outright gift, far simpler and more tax efficient. 

What sort of value is this gift going to be?

AKW

Many thanks for your advise - we did change our accountant since 2021 and I am preparing for a meeting next week.

Past experence made me cynical and I therefore like to gather information from different sources. I very much appreciate comments from knowlegeable people like yourselves. 

I take note of your recommendation to gift the main residence outright. 

AKW

Thank you, Richard, for your offer to help with my calculations.

AKW

Thank you Richard.

How is the exit charge or 10 year charge calculated?
What NRB is available to the trust?
Does the NRB available to the trust have anything to do with the NRB of the original settlors?

Yorkie1

OP, you may find it better to talk to an accountant or solicitor who is a member of STEP - they are well versed in all the details of such questions
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