Hi, I have a couple whose property is worth £2.4 million. They have other cash assets, but not hugely significant.
They’re looking at various ways to be able to access their RNRB.
They’re considering gifting one-third of the property to their children during their lifetime as a PET, thus bringing their combined estates to below £2 mill. Putting aside all the negative tax and other potential problems this creates (also aware of the GWR) - would it mean however that the PRs on the second death could claim two full RNRBs since the combined estate of the second to die would be under £2mill?
This is a theoretical question and not advice by the way!
If the gift of the one third share is a GWR then the asset remains included in the estate for RNRB purposes, so effectively both full RNRBs are not available on second death.
If the gift of the one third share is not a GWR, (e.g. because an exception applies), then this reduces the value of the estate for RNRB purposes so that both full RNRBs are available on second death, all else remaining equal.
I agree. For purposes of assessing whether the £2m limit is exceeded or not the estate’s value at death must not exceed this figure and for this purpose “estate” includes lifetime gifts in which a reservation subsists at date of death.