H&W made Mirror Wills incorporating NRB Discretionary Trusts. Property was held as tenants in common. H passed away in 2021 and the only asset that went into the H’s Will trust was an investment that used part of H’s NRB (over half already used). The remainder of H’s NRB was left available to be claimed upon the second death. Residue was left to W. It is now over 2 years since H passed away, the trust was registered. Would it be possible to now transfer a percentage of the late H’s share of the property, equivalent to the amount of the unused NRB to the Discretionary Trust in order to fully utilise the NRB now rather than wait to transfer the unused amount on W’s death. A few questions really:
Are we correct in thinking that this can still be done despite the period of time that has elapsed since date of death?
Are there any tax consequences that we should be considering?
When calculating the percentage that can be transferred, would we look back at the Probate value of the property rather than the current value?
Thanks in advance
Yes. The trustees of the NRB DT are entitled to the sum equal to the NRB (in the absence of any other documentation). They have only received H’s investment bond which did not use the entire NRB. Therefore, as H had other assets, the trustees are entitled to the balance making up the NRB.
The trustees of the NRB acquire at death value for CGT purposes. If the assets in the trust are then later disposed of, there may be tax consequences for the trustees.
Current value to satisfy the legacy due to the trustees.
I Will Solicitors Ltd
The appropriation of part of the property would normally be at the value of the date of appropriation. I believe the STEP provisions permit appropriation at values at the date of death (assuming appropriation within three years of death of death).
If the STEP 2nd edition provisions are incorporated in the Will then as Malcolm points out, the appropriation could be made at death value provided completed within 3 years of death. (Para 22.) I believe this would be beneficial for IHT purposes if the asset has increased in value since death as more of the asset is outside W’s estate.
Does make me wonder why the STEP 3rd edition has removed the power to appropriate at death…
I Will Solicitors Ltd