H died. Estate approx. £575K. Residue to W less £10K legacies.
Ws estate, inc Hs estate approx. £2.9m. We are looking at PETs to bring below £2m taper but £1.9m of the £2.9m are rental props and her residence (residence was owned jointly with H, not in the £575K). Rentals owned since 1980s with large gains so problematic there.
I am thinking that DoV to pass on £175K equiv share in the residence to kids now so not possibly lost due to taper so that Hs RNRB captured now. Then cash based PETs where possible, inc from Hs estate rather than DoV as may survive 7 years to regain full 2 x NRBs. Though she has just turned 84.
W has more than enough income (Gifts out of Excess Income have been discussed).
Object to move estate to as near to £2m as possible but at least use Hs RNRB now so not lost to taper Ws estate over £2m.
Other option is CLTs with some/all rentals, claim CGT holdover but with 20% charge. I am not so keen on this, and I doubt the family would be either. Happy to be convinced otherwise.
Do members think the DoV re: RNRB and PETs is a reasonable option
I would say you are thinking along the right lines.
Using H’s RNRB also possibly will allow the W to have a discount on the value of her remaining share of the matrimonial home on her death.
Bear in mind you can potentially shift more than £325,000 in value into a trust with holdover if the widow sells (rather than gifts) the properties to a trust for an amount equal to their base cost (albeit there may then be some SDLT to pay). The widow ends up owning an ‘IOU’ issued by the trust that she can then assign to her children.
You can possibly avoid the SDLT if the properties are transferred subject to a charge to secure payment of the base cost instead of in return for an IOU (the rationale for this was explored in detail years ago in connection with the
SDLT consequences of charging property in favour of a nil rate band discretionary trust if executors appropriate the property subject to the charge to the surviving spouse).
Obviously this technique will work best with properties that are standing at a relatively small gain compared to their base cost. If the value of the properties is virtually ‘all gain’ then there isn’t much to be gained from using this approach.
The danger is that the widow dies within 7 years in which case you potentially end up in a worse situation overall than if you had done nothing (because you lose out on the tax-free rebasing of the properties on death for CGT). It is worth investigating the cost of life cover to pay out something by way of compensation for that if the W were to die within the next seven years. If the cost is prohibitive then that is a strong indicator that you should do nothing and let events run their course.