Nil rate band discretionary Trust


#1

I am dealing with the administration of a deceased’s estate whose Will set up a NRB Discretionary Trust. He executed a Codicil removing the Trust so there is now no Trust. His estate is taxable.

His wife predeceased him and her Will set up a NRBDT however she did not sign a Codicil removing it. The wife died 2 and a half years before him so too late to do a Deed of Appointment for s144 IHTA to apply. They owned their property as tenants in common, which, on the wife’s death was worth £400,000. Her share (£200,000) has therefore passed into the Trust. The wife had other assets in her sole name (although I am not sure the value of these assets at this stage) however the husband closed down the accounts and paid the money to himself (he was the residuary beneficiary of her estate) In due course, I will need to work out what TNRB is available from the wife’s estate but wondered whether an appointment from a Trust can be implied seeing as the husband has clearly appointed his wife’s sole assets to himself but never executed a deed of appointment to formalise it. Also, I am guessing that there is no TRNRB as the wife’s share went into the DT? Could it be argued that as he lived in her share of the property for his life that he actually had a IPDI and therefore her RNB is available? (his Will leaves his estate to their daughter and grandchildren) Any advice would be most appreciated.

Many thanks,

Natalie Tonkin
Bailhache Solicitors


(Simon James Northcott) #2

There is due to the NRB trust the NRB plus interest. There is also an unadministered estate. A grant (presumably de bonis non unless there is another executor still alive) will be needed to finalise the administration
and constitute the trust, which it appears H never made a conscious decision to do.

The half share of the house in W’s estate will need valuing and may be enough to cover the NRB trust-if not there is a debt due from H’s estate for the balance. No RNRB will be available for H’s share of the house, but
probably W’s will use up hers and his.

No TNRB will be available. H will not have an IPDI as he had the right to live in the house. I imagine the NRB trust required a deed to advance/appoint, and if so this cannot be implied.

As always, the above is subject to the terms of the Will and the actual facts concerning the administration of W’s estate

Simon Northcott


#3

Thank you, Simon. W’s share of the house was worth £200,000 so isn’t enough to cover the whole NRB. Is there a debt due from H’s estate even if the other assets were joint bank accounts?

Thanks,

Natalie Tonkin
Bailhache Solicitors


(patrick moroney) #4

Only sole assets and assets held as tenants in common will fund the nil rate band legacy. Joint assets which passed by survivorship to the husband are unaffected.

Patrick Moroney


(Simon James Northcott) #5

You said W’s share was £200,000 on her death-to work out what is due to the trust on H’s death, you need a valuation at H’s death to see what the shortfall was then for his iht account.

You said there were other sole assets in W’s name-those will be taken into account for the NRB trust but not joint assets, as Patrick has said.

Simon Northcott


#6

Going back to your earlier post, Simon, can I ask why H’s RNRB isn’t available for his estate?
Natalie Tonkin
Bailhache Solicitors


(malcfinney1) #7

No doubt Simon will comment on his contribution but I think when he said “No RNRB will be available for H’s share of the house but probably W’s will use up hers and his” H should have been W and W should have been H.

In other words, as W left her interest on discretionary trust no RNRB would be available but on H’s death as the property is left to his lineal descendants H is entitled to his own RNRB plus the transfer from W.

To the extent that W completely satisfies the nil rate band discretionary trust there will be no transferable element; however, if there is a shortfall in the nil rate amount then there will be an unused transferable element.

Presumably the value of W’s share of the property is the date of its appropriation not the date of death/probate value unless the will so provides. The initial death value of £200,000 value may now have increased above that amount making the shortfall (if any) smaller.

Apologies to Simon if I’ve misunderstood his comments.

Malcolm Finney


(Simon James Northcott) #8

I got H and W the wrong way round!

" No
RNRB will be available for W’s share of the house, but

probably
H’s will use up his and hers."

Simon Northcott