RNRB and Discretionary Trust

#1

I am preparing the Inheritance Tax Account for lady who had an IIP in an offshore trust. The trust owned a property in the UK which she occupied. At date of death she didn’t own any property and her net free estate is approximately £200,000. The only nil rate band available is the standard £325,000. The property was valued at approximately £900,000 at date of death.

The terms of the trust direct the trust fund to be held on discretionary trusts following the death of the life tenant.

Given that the trust property does not pass to the deceased’s children absolutely on her death, the RNRB would not apply. I can’t see that an appointment out of the trust to the children within two years of death would allow the RNRB to apply either but would be pleased to be corrected. Any views on how the RNRB may be claimed?

Samir Hussain
Gregsons

#2

It sounds like you are saying that the IIP is aggregable with her estate for IHT purposes. Have you checked that that is the correct position?

Also, when was that trust established, by whom and was it by a Will?

Paul Davidoff
New Quadrant Partners

#3

I don’t believe there is anything you can do. It has to vest immediately and neither s.142 or 144 apply to an inter-vivos settlement.

Andrew Goodman
Osborne Clarke LLP

#4

The trust was created by the deceased’s ex-husband during his lifetime in 2001 as an IIP for her.

Samir Hussain
Gregsons