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:
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.
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?
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
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
Thank you for your comments, which are appreciated.
I should explain that we do have an executor (the son of the deceased). It is specifically the NRB Discretionary Trust which appoints a separate, sole Trustee (the deceased husband). We therefore wish to apply for a Grant of Probate (with son as executor), however before doing so we will need to submit the IHT return.to HMRC, along with evidence of appointing out of the DT, so that we may claim the RNRB. My understanding was that in such a case where a sole trustee of a DT is deceased, the deceased trustee’s PR’s may appoint new trustees.
I think the reference to waiting 3 months is a reference to what was called the ‘Frankland trap’ (Frankland v IRC [1997]). The trap was, in substance, abolished by amendments to IHTA taking effect under the Finance (No. 2) Act 2015 so there is no longer a need to wait 3 months.