Baffled - do I need to complete IHT400 for first spouses death?

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/82044795#Comment_82044795

https://forums.moneysavingexpert.com/discussion/comment/82044795#Comment_82044795

We have done the same with our finances and like your parents are in the fortunate position to fund the best care we can obtain without worrying about being having to rely on a cash strapped LA. Our wills are simple mirror wills with no trusts involved. The only possible reason I can see for setting up this trust is to protect beneficiaries in the event of the remarriage of the surviving spouse, but that does not seem to have been mentioned.

RipleyG

@poseidon1 Thanks. I will indeed go back to the solicitor's firm and ask the question. Yes, Mum and Dad had mirror wills. By fallback position, do I understand correctly that you mean what happens when the second spouse dies, or if they had both died together? In both circumstances, both house and finances go to the discretionary trust with the two children as beneficiaries. Should either child have died, there is a further comment that any grandchildren take the share of their parent (in equal shares if more than one).

@Keep_pedalling ah, how gloriously simple that seems! :-D My Dad didn't love ambiguity so remarriage may have been a consideration - he'd have hated the idea that if mum remarried and then died before her new spouse, anything passed to her may have then passed to her new spouse rather than his own children. I know he had the same concern in terms of his children - had I died before my spouse (we're unable to have children), he would far rather have 'protected' his assets so they go to his own grandchildren rather than have me leave them all to someone not directly related.

Perhaps a lesson to us all that trying to control things after our own death causes complexity!

But the greater lesson I am learning from this is that if you have 'enough' then give the rest away sooner rather than later. So I have now just offered to pay the first year of my neices university fees, and will be making regular gifts from income to cover the same for my other niblings.

Keep_pedalling

Agree trying to control how your money is spent beyond the grave complicates things and can backfire badly. Gifting in your lifetime is much more joyous. Helping our children but their first homes (second ones come to that) and helping daughter and DiL to be stay at home mums for several years has been money well invested.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82044926#Comment_82044926

The discretionary trust as the default arrangement on death of both parents is a completely unnecessary complication and worse still disallows your mother's residence nil rate band.

Drafting wills that lose one parent's residence nil rate band is careless, but losing both must border on negligence given the eradication of £350K worth of combined NRBs.

Certainly a case for a free brand new will on your mother's behalf from the law firm, as well as the work necessary to rectify the poor outcomes from your father's will.

I don't think I have seen quite such a poor tax and administrative outcome from a STEP solicitor drafted wills. This is the kind of nonsensical outcome one would expect from an unregulated will writing firm.

I do have to wonder whether the first solicitor was quite elderly and a mere legacy STEP member ostensibly 'inducted' on grounds of experience, rather than a newer member who took the appropriate qualifying exams topped up by annual CPD.

RipleyG

@poseidon1 that's even more concerning to hear.

Elderly? I don't think so. The original wills were written in very late 2016, and an internet search suggests has enabled me to find the original original solictor - he is still registered on the STEP website and now runs his own organisation "specialising in advising individuals and business owners about Wills & Succession planning, Inheritance tax mitigation, Powers or Attorney, Probate and Trusts." A website photograph, and comments about 'x years prior experience' suggest he'd be 50-55 years old now, so 40-55 years old at the time he drafted the will.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82045838#Comment_82045838

Concerning indeed.

Hopefully this chap is not out there creating damaging structures on the scale of the McClure scandal, the only saving grace is that he doesn't appear to have inserted himself or the firm into the trusts as an ongoing professional trustee - see article below:

https://www.clarkewillmott.com/news/collapse-of-mcclure-solicitors/