Will with Trust

nxdmsandkaskdjaqd

I am in the process of having a husband and wife (mirror will) will drafted by a local solicitor (not steps).  Because my estate is over a six figure sum, she has proposed that I have a trust set up to contain the Nil Rate Band of £325,000 and Residence Nil Rate Band of £175,000.  This trust would protect this part of our estate from  Inheritance Tax.

When we decided to get wills drafted it was not my intensions to over complicate the process.  The reason for having will drafted is that I have a medical condition that will shorten my life span.  The proceeds of our estate will all go to our only son.

I am not sure of the name of the trust, but is there any words of wisdom that this is the right thing to do, or any questions I should be asking? 

FlorayG

What is a 'husband and wife will' please? Is that one will or two separate wills? I've never heard that term

nxdmsandkaskdjaqd

FlorayG said:

What is a 'husband and wife will' please? Is that one will or two separate wills? I've never heard that term

Just a mirror will. Edited opening post.

FlorayG

So to clarify - you are each putting your estates in trust to your son with the surviving spouse having use of them until their death? Is that your intention?
You appreciate that once one of you die the other can completely change their will if they decide to?

Keep_pedalling

Get a new solicitor. NRB trusts for married couples became obsolete when Gordon Brown made the NRB transferable to a surviving spouse’s estate back in 2007. What she is proposing will not save a penny in IHT and is likely to hit your son with CGT and SDLT liabilities.

The only sort of trust to possibly consider is an immediate post death interest trust (IPDIT). These are created to protect both the security of the surviving spouse security and your son’s eventual inheritance in the event your wife remarried and failed to make a new will. They are also tax efficient as it avoids CGT later down the line and, if you son does not already own a home, avoids him loosing his first time buyer status or addition SDLO when buying a home.

A IPDIT is commonly used to protect your half of the marital home. The surviving spouse retains beneficial ownership with legal ownership being held by the trust until the death of the serving spouse when it passes to the eventual beneficiary (remainder man).

I recomend you find a step solicitor to do both wills. 

FlorayG

Keep_pedalling said:

Get a new solicitor. NRB trusts for married couples became obsolete when Gordon Brown made the NRB transferable to a surviving spouse’s estate back in 2007.

oh and here was me thinking I was ignorant not having heard of this option!

Cornish_mum

I concur completely with keep-pedalling. 

I am in similar position to yourself.  Married, 6-figure estate, shorten life expectancy with an expectation that my husband is very likely to remarry, and a wish for my children to inherit my half. We used a STEP solicitor for mirror wills with an IPDT for our home (husband has life interest), children eventual beneficiaries. 

Best wishes CM

Linton

Can you explain exactly what you are trying to achieve in what circumstances? It would seem that your situation is not unusual.  I suspect you will find that either, as @Keep_pedalling suggests, existing procedures will do the job without any need for a bespoke Trust or if your requirements really are complex you should be talking to a STEP solicitor rather than what could be a trust salesman.

Trusts can be complex, expensive and tax-inefficient.

nxdmsandkaskdjaqd

Thank you all for your replies.  It was never my intensions to include a trust in the wills, the idea came from the solicitor, and I was not exactly comfortable with it. Hence my post today.

I am happy to close this thread.