Good morning
I’d be interested to know how you go about drafing Will for very wealthy clients.
Say each spouse has an individual estate of £3million, so £6million overall.
My client is an accountant so is well versed on inheritance tax and nil rate bands. He has identified a structure he’d like me to follow-
On first death-
- NRBDT legacy
- Residence nil rate band legacy - by which he means life interest to children in value of property equivalent to his RNRB (the problem being of course that he doesn’t have one!)
- Residue on life interests to wife
On second death -
50% discretionary trust for daughter and children
50% to DPT for son
The problem with his analysis is that point 2 above is redundant as he doesn’t have an RNRB anyway. Nor is there any RNRB to transfer on second death if he didn’t include that clause because of course first estate is over taper threshold.
So I’m thinking the only RNRB that can be claimed here is that belonging to survivor’s estate. But only if survivor manages to get their estate down to below the threshold AND providing that more value isn’t aggregated to the their estate by the life interest trust.
Surely the way forward would be on first death -
Small proportion of property value on first death held on life interest trust for spouse - not too much so to keep what aggregates with survivor’s estate to a minimum but sufficient to ensure that on second death PRR can apply to the whole property AND to give surviving spouse extra security in the property
Then residue to a DT with trustee powers to carve out life interest for spouse and/or children if it so happens that first spouse has been able to manage estate size before their death and RNRB now available.
Yes it would mean IHT on first death unless more is appointed out on life interest trust to survivor- but that only transfers the IHT problem to the survivor’s estate.
What do you think and what do you do when faced with such valuable estates?
Thank you,
Deborah