Hi all,
I’ve been looking to close a flexible life interest trust. However, usually the Will has a clause to say the trustees can deal with the trust without the need for a Grant of Probate, and in this case the clause is missing.
Is there a need to have the grant of probate before appointing out the trust to the deceased’s wife (which is what we’re looking to do to save the RNRB)?
Many thanks
If the intention is to remove the FLIT, to enable RNRB to be available, the life tenant either needs to disclaim the FLIT, or remove it by deed of variation. An appointment by the trustees cannot engage s.144 IHTA and, thereby, the “reading back” for IHT purposes, which is what will enable RNRB to be “claimed”.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Thanks Paul.
The discretionary trust encompasses minors though. Do I not need the trustees to use their powers in the Will to limit the beneficiaries to be those who are over 18 only to allow a DOV to take place if I operate using a DOV alone? Hence the requirement for the GOP?
Or is it you’re saying that once a disclaimer is completed where mum relinquishes her entitlement by disclaiming, thereby gifting the estate to the disc trust, then appointing out the assets within 2 years will mean we can claim the RNRB? If so, is the GOP not required to deal with the deed of appointment from the trust because this is the trustees role rather than the executors?
I feel like either way, a GOP is required because the trustees have to act in either scenario in respect of the trust.
Sorry, I haven’t understood what you mean that an appointment by the Trustees cannot engage s144. Could you elaborate for me? Do read what you’re saying to mean that the trustees appointing the assets out of the trust will not allow the RNRB to be claimed which is contrary to my understanding.
Thank you
The “reading back” provisions of s.144 IHTA 1984 only apply if there is no interest in possession, so that they cannot apply if there is a FLIT. If the trustees exercise their power of appointment, this terminates the FLIT no earlier than the date of the appointment regardless of when the appointment purports to have effected that termination.
If a variation under s.142 IHTA 1984, only the person giving up their interest – the widow? – needs to be part to the variation unless such variation gives rise to an (additional) IHT liability, in which case the personal representatives are also required to be party.
Whilst the executors and trustees powers arise from the will, regardless of whether a grant is obtained, for various reasons I advocate that a grant is obtained. I have previously shared my thoughts on this via an article published a couple of years ago on Gill Steel’s LawSkills website, which I have been happy to share on request since Gill’s retirement (and closure of the website).
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals