Accessing third NRB/ RNRB

Hi, advice sought on the following please:

Widower made a Will leaving his share of property (worth about £500,000) on life interest trust to second wife for her life with his two children as remaindermen. Residue also to wife (worth about £120,000).

Wife dies one week after husband (no survivorship clause in his Will).

Therefore, her estate receives the residue from husband’s estate and I assume the life interest trust is created (albeit just for a week…?); is the value of husband’s share of property also added to wife’s estate for IHT purposes?

Wife has an estate of well over £1.5mill, not including the value of the share of the late husband’s property.

What I’m trying to work out is how to access the widower’s first wife’s nil rate band and residential nil rate band.

Either the share of husband’s property doesn’t form part of wife’s estate in which case we could use the first wife’s allowances for husband’s estate and transfer his balance to wife’s estate.

Or, would we have to think about some sort of deed of variation on husband’s Will…

I’d be grateful for any helpful tips / comments. Many thanks.

Gill Collins
Solicitor - Warwick Barker LLP

The life interest left to H’s second wife under H’s will qualifies as an IPDI and hence on second wife’s death the trust property falls part of her estate for IHT.

Second wife’s own estate (ie without the residue from H’s estate and the IPDI) is more than sufficient to absorb the second wife’s own NRB and RNRB. Hence, no point in seeking to transfer any unused NRB and/or unused RNRB re H’s estate to second wife’s estate.

H’s own estate is not subject to IHT due to spouse exemption applying. Hence, H’s own NRB and RNRB are unused. H’s estate amounts to £620k. In principle this total amount is sufficient to absorb H’s own NRB and RNRB (aggregate 500k) leaving 120k.

A DoV could thus be executed by second wife’s estate redirecting all H’s estate to H’s children. H’s estate would then absorb all H’s own NRB and RNRB leaving 120k [ie 620k less 175k less 325k] to then be covered by a claim to transfer this amount from first wife’s unused NRB and/or RRB.

Malcolm Finney