DoV of NRB discretionary trust will

Trusts Discussion
1

I welcome any guidance on this:

I am acting for the executors of the estate of David who died the end of last year. His wife died in 2017 with an NRBDT will and the solicitors who acted for the executor’s of her estate did a DoV within 2 years of death and in the recitals purport to ‘replace the nil rate band legacy with an IPDI’ The solicitors varied the will to say:

My trustees shall hold the nil rate band legacy on trust:
(a) to pay its income to David for his life
(b) my trustees may from time to time raise capital out of any property in which any person has currently an interest (given by this will or any codicil to it) for life (even to the extent of exhausting that property) and pay it to or apply it for the benefit of that person or lend all or part of that property to that person with or without charging interest or taking security and other such terms as to repayment and otherwise as they think fit.

By a trustee resolution they:

  1. transferred the half share of the matrimonial home in the estate to David subject to him giving a charge of that half for half the value of the property from time to time. (£250k at the time).

  2. a further £175,000 in cash assets repayable on demand.

(this adds up to total of deceased’s NRB and RNRB at the time).

The half share in the property is now worth £300k. The trustees and beneficiaries of both estates are the same and the trust isn’t registered.

I’m trying to work out how to treat this now. Do I show all the assets as belonging to the deceased and complete IHT419 for the loan. Do I complete IHT418? or am I claiming TRNRB?

How do I treat the increase in value of the property loan by £50k.

Not sure if I’m overthinking this

2

I’m most bothered by the fact that you say this was done by DOV. In general it isn’t possible to vary a discretionary trust by DOV because a DOV must be made by the persons beneficially entitled - and in the case of most discretionary trusts it is impossible to get those people as signatories to the document since they typically include minors, the unborn and the unascertained.

It is possible to appoint an IPDI out of a discretionary trust in a will, because the trustees would typically have power to do that by Deed of Appointment. Was the wrong thing done in your case? If so that changes the status of the rest of your question.

1 Like
3

What an excellent point, I hadn’t even considered this. The original beneficiaries included ‘my remoter issue, whether living at my death or born thereafter’. The document is definitely a DoV, so the wrong thing was done in 2017. So does that place those assets back in the estate of the first spouse?

4

They tried to make a section 142 IHTA 1984 variation, but this cannot be done, as the previous commenter explained. They should have made a section 144 IHTA 1984 appointment using their overriding power in the discretionary trust. Both of these must be done within 2 years. As the 2 years has elapsed the opportunity to do so is lost. The NRBDT was never changed since the date of death and persists to this day.