I am dealing with the estate of someone who never married and had not children. They have left £400,000 in legacies, £350,000 into a discretionary trust. The rest of the estate passed to charity. Probate has been obtained.
There are insufficient assets in the estate to pay the legacies left in full. IHT of around £25,000 has been paid.
The residuary estate was left to charity (who will now receive nothing).
If the trustees were to appoint £75,000 out of the discretionary trust (which would ultimately bring the non-charitable gifting to £325,000) we could claim the tax back from HMRC. Logically, I think we have to pay the total £75,000 to the charity and the abatement would not apply to this gift as it isn’t read back into the Will. It is my understanding that we cannot vary the Will to reduce the gift to the discretionary trust.
In the circumstances it might be best to just gift the residuary charity the available funds over £325,000 however the estate administration is ongoing and I am unsure what figure this might be!
I would be grateful for other’s views on this.
Thanks