Discretionary Trust of Residue, effect of appointing out capital therefrom on inheritance tax on

Hi I wonder if someone may be able to help me with a question about the effect of appointing capital out of a discretionary trust of residue on the inheritance tax position in an estate.

We are acting for an Executor of a Will and the deceased died last year. They left their property and a separate piece of garden land as life interest trusts in their Will and then placed the residue of the estate consisting of the proceeds of bank accounts and premium bonds worth approx. £333,000 in a discretionary trust with the beneficiaries being listed as eligible to benefit being the spouse, the deceased’s children and grandchildren. The property placed in the life interest trusts attracts the spouse exemption as the spouse is the life tenant for these trusts and we are wondering in relation to the discretionary if some of the capital of the discretionary trust were appointed out of the trust now such as £10,000 to the spouse before we apply for probate, would the difference between the IHT allowance of £325,000 and the total in the residuary estate of £333,000 still result in there being inheritance tax payable?

I would appreciate your thoughts.

A s144 appointment of £10k to the spouse will be read back for IHT purposes so the spouse exemption will be uplifted by £10k and the estate will be below the NRB.

However, if not done the tax to be paid will be £3200 and as you have 2 years from the date of death to do a s144 appointment I have in the past suggested that grant is obtained with the will and trust as it is and the tax paid to give some breathing space to consider the trust as a whole and then subsequently reclaimed any over paid IHT once the s144 appointment to the spouse has been done.

Thanks for this helpful reply.