Given my recent posts regarding this, I am now questioning my use of it.
I am dealing with an estate. The husband died in 2023 and his Will sets up a NRBDT.
The wife died in 2024 and we are now completing the IHT forms for her estate.
The clients have instructed me to disband the trust and for the husband’s estate to pass to the wife’s estate.
It seems to me that if we leave the trust and/or pass the assets to other individuals named in the NRBDT then the estate will qualify for Joint Ownership Discount. However, if the trust is brought to an end in favour of the wife, we will lose this. Does when the trust is brought to an end have any bearing on this or, does the fact that the trustees own part of the property when the wife died mean that the wife’s estate automatically qualifies for it.
If the wife has now died, does she not fall out of the class of beneficiaries?
It would be rare for the estate of any beneficiary to be within the beneficial class, although some or all of the deceased beneficiary’s own beneficiaries may well be.
Provided the property does not effectively merge for the purposes of IHT (so far as HMRC is concerned), the discount for joint ownership should usually be available.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Presumably they are requesting this so that the wife’s estate might qualify for transferable nil rate band and possibly transferable residential nil rate band? If so, is any joint ownership discount worth more or less than £325k (or £500k)?
Can the wife’s estate not still benefit, irrespective of the fact that she has died? I am sure that we have done this before.
When you say provided the property does not merge, does that mean that by dissolving the trust in favour of the wife the property does merge into the wife’s sole name?
Revisiting this thread, the ultimate beneficiaries under the wife’s estate are also listed as potential beneficiaries under the NRBDT. With that in mind, I am minded to bring the NRDT to an end in favour of the ultimate beneficiaries, rather than the spouse, thereby cementing the fact that at the date of the wife’s death the property is jointly held to qualify for the Joint Ownership Discount.