The recent post from John Barret under the topic “Unadministered estate on intestacy” has led me to wonder whether the provisions of the Limitation Act might have an effect on the (possibly many) unconstituted nil rate band discretionary will trusts that are still awaiting discovery on the second death. We quite often come across cases where nothing has been done on the first death, and there have been a number of posts on this forum in the past on the subject.
Is it right that if more than 12 years have elapsed since the date of the first death, the nil rate band legacy can no longer be claimed? If that is right, how does that impact the availability of the transferrable nil rate band on the second death?
Diana Smart
Gordons LLP
Normally, the surviving spouse is a trustee of the nrb trust, and nothing is done, with the surviving spouse effectively converting the assets for his/her own use. In these circumstances the normal 12/6 year limitation periods do not apply, by virtue of s.
21(b) of the Limitation Act:
21Time limit for actions in respect of trust property.
(1) No period of limitation prescribed by this Act
shall apply to an action by a beneficiary under a trust, being an action—
(a) in respect of any fraud or fraudulent breach
of trust to which the trustee was a party or privy; or
(b) to recover from the trustee trust property or
the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use.
Simon Northcott