Appointing out of a Discretionary NRB Will Trust within 2 years to adult children

Trusts Discussion
1

I am dealing with the estate of the second spouse to die, both of whom had NRBDT Mirror Wills. Whilst I have read around the topic, I am tying myself in knots in trying to ensure that I am dealing with matters correctly. H died first in 2016 and his full estate (£250K) was left into a NRBDT with spouse, children and issue as discretionary bens. W has now died. Her estate is £450K and so we wish to appoint out of the NRBDT and terminate it, so that the RNRB may be claimed. H’s remaining £75K TNRB is also available. Points and The trust Questions:

  1. W’s sole trustee is H who predeceased her. I am intending to have his PR enter into the Deed of Appointment in W’s estate appointing everything out to the adult children and terminating the trust.
  2. Must I leave it 3 months from the date of death of W before attending to the appointment out so as to maintain the reading back provisions?
  3. The trust contains half of a property valued at £175K. I am concerned about possible CGT issues for the 2 adult children to whom the property is appointed, both of whom are homeowners (albeit one overseas). Must we assent the 50% share to them or may we hold fire and still sell from the estate? Any thoughts on CGT?
    Many thanks in advance for any assistance
2

As H died before W, his appointment as trustee will have failed, and so his PR has no standing in W’s estate.

You will need to look to Rule 20 Non-Contentious Probate Rules 1987 to identify who is now entitled to a grant. In the absence of any other person being appointed executor (as might be suggested by the posting), a grant of letters of administration will be required, and no one will have authority to take any action until that grant is issued.

As a grant will be required, and mindful of the delays that currently exist with grant applications, it would be surprising if the grant were to be issued within 3 months of death.

On the CGT point, in view of the fact that there is much speculation as to what will happen to that tax in next week’s Budget, I suggest you look at the proposed changes before considering the position.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals