Advising re options for NRBDT & TRNRB

Trusts Discussion
1

I’m advising trustees following the death of their father who made a will with a NRBDT and residue to surviving spouse absolutely.

The property is worth £900k owned 50/50 as TIC. Clients are deciding whether to keep the NRBDT or appoint out either to spouse or children/grandchildren. Surviving spouse is in care and if she inherits her late husband’s entire estate, she will be very close to £2m so I am advising against appointing NRBDT to spouse.

My understanding is that if they keep the NRBDT and populate it with deceased’s share of the property up to £325k, on the second death, both the RNRB & TRNRB can be claimed provided surviving spouse owned at least £350k in her own right - is that correct?

If they keep the NRBDT, given that the surviving spouse is in care, it may be that a decision is taken to sell the house, and I believe that there may be issues with the downsizing provisions and claiming the TRNRB - I’m not sure I understand what the issue is and wonder if anyone can help me with this?

Many thanks,
Claire

2

Surviving spouse inherited property interest worth [450k less 325k] ie 125k. On surviving spouse’s death property interest value will be [450k + 125k] ie 575k.

On surviving spouse’s death own RNRB of 175k plus 175k (transferable) ie 350k maximum.

If property is sold prior to surviving spouse’s death (say for 900k) then “downsizing allowance” will be maximum of 350k

Malcolm Finney

3

Thanks Malcolm, much appreciated.