How do you structure your Wills where you have a widow who was provided 100% of their late husband / wife’s estate. They then re-marry and have children from previous marriage, but want to make use of their late husband / wife’s unused nil rate band.
I have read that you can specify that you give up to the value of the nil rate band to say the children however, do you have to specifically mention the deceased’s name.
Additionally, how does this work if their main asset is the home and they want the survivor to have a life interest?
Is there any good reading material / precedents that are worth looking at?
As to sources, I’d say the best technical discussion I’ve seen is in Drafting Trusts and Will Trusts by James Kessler et.al., which also has precedents for the situation.
The problem you’re fighting against is that a person can only claim 100% of a transferrable nil rate band, even if they’ve been widowed twice and therefore would want to be able to claim 200%.
The easiest way (by which I mean easiest to understand, rather than easiest to do!!) is for W to leave a legacy of 2x the nil rate band (so currently £650,000) to her children on the first death, residue to H2, and for H2 to leave a legacy of the nil rate band to his children on first death, residue to W. Thereby:
If W dies first her executors claim her own nil rate band plus a transferrable nil rate band from H1 and the rest of her estate is spouse exempt. On the second death H2 claims his own nil-rate band. So three have been used altogether.
If H2 dies first his executors claim his own nil rate band, and the rest of his estate is spouse exempt. On the second death W claims her own nil rate band plus a transferrable nil rate band from H1. Again, three have been used altogether.
As I’ve said, that’s the easiest scenario to understand but there are many complications, including:
In a second-marriage situation the above might not be that practical because the money needs to land fairly between the two families. Also there needs to be enough free cash to do it.
It isn’t necessary to utilise both nil-rate bands on the first death to achieve this effect, and I’ve seen precedents for this.
The residence nil rate band theoretically can be used in exactly the same way as described above - but actually doing so is tricky if children are to get an interest in the survivor’s home on the first death.
Total nil bands available in your example are in theory up to £1.5million. If both parties to the marriage are widowed the theoretical maximum is £2million.
All of the above might look different after October.