Residence Nil Rate Band and Taper Threshold excess


(Anne Slater-Brooks) #1

I have a scenario whereby the clients have a combined estate of £2.9 million and all assets are passing to each other on death thus meaning they receive no benefit from the RNRB. However if we were to suggest that they seek legal advice and have some of the assets passing to a trust on first death, thus ensuring that the second to die does not have an estate in excess of £2 million, would this effectively bring the RNRB back into play? What sort of trust would best achieve this? I am thinking IPDI does not work unless we make the kids the IPDI beneficiary which is unlikely to sit well but can anyone suggest anything else?

Anne Slater-Brooks
Downing


(malcfinney1) #2

Equalisation of estates and the effective use of a DT on the first death should allow the estate of the surviving spouse to be kept at £2m or less and thus ensure full use of the RNRB of 350k.This would result in an IHT saving of 140k.

Presumably on first death 550k could be left to surviving spouse and balance 900k (after IHT) settled on a DT leaving the 350k RNRB for offset against surviving spouse’s estate.

Malcolm Finney