I am administering the estate of H who recently died and who had a NRBDT in his will. W and adult children wish to vary the will by appointing out of the trust and instead place his half share of the matrimonial home into a FLIT for the purposes of reading back.
Can members provide any advice as to what precedents they would use for such a document, as I am unsure if this is done in either the Deed of Appointment or in a Deed of Variation (or both!)
Is there anything else that I should be wary about or should look out for when doing this?
Many thanks for your the response on this matter. A couple of further queries if I can be so bold…
The precedents I have found all appoint out from a NRBDT on a general life interest trust to spouse. If such an appointment is carried out and NRB is £325k, do the Trustees simply decide on what trust property should constitute the trust, for example the half share of the marital home (DOD valuation £225,000), along with £100k of assets?
If the family only wish for the half share of the property to be put into the trust can the Deed of Appointment appoint both £100k to the spouse absolutely and also appoint the remainder of the NRBDT to the life interest trust in the same document?
With regard to 1), the personal representatives usually agree with the trustees as to what assets might constitute the trust, although, technically, it is a decision of the PRs and the trustees should accept what they are given. I would be wary of using the date of death value, as the assets should be re-valued for the purposes of the appropriation as at the date of the appropriation (Re Charteris 1917). A half share of the property might be valued as a half of the entirety value for IHT purposes, but for the appropriation you are looking at the market value of the half share alone and a discount should be applied (as though for CGT purposes).
As regards 2), I see no reason why the deed of appointment cannot be used to direct one asset into a FLIT and the remainder of the trust fund absolutely to the surviving spouse, provided the deed is executed by the correct persons and under the correct power. I would caution against specifying a particular value for the “mop up” appointment to the spouse, in case there is any income or capital appreciation that falls outside of the appointment and, therefore remains within the NRB trust. I believe it would be preferable to specify the property interest and appoint the “remainder” of the trust fund to the spouse.