Gift of nil rate band

A Will contains a gift of the nil rate sum to a Settlement set up in the deceased’s lifetime which contains £10. Residue is left to the surviving spouse. I know that usually the nil rate sum can be appointed out to the surviving spouse by deed of appointment if executed between 3 months and 2 years following the death, when there is a normal legacy of the nil rate sum. Does the same apply when the legacy is to a settlement already in existence when the testator dies? ie can the trustees of the Settlement appoint the £325,000 to the surviving spouse (she is a beneficiary in the Settlement) thereby preserving the deceased’s nil rate band?

Anne Duguid
LGP Solicitors

Yes, as the sum is still “settled” by the Will, so s144 IHTA will apply.

Simon Northcott

Yes, and s. 144 IHTA 1984 will apply to the redirected benefit from the estate.

However, when considering the exercise of their discretion, the trustees should also be mindful of the intention when setting up the pilot trust, and whether the testator’s views had changed since then.

Paul Saunders

There is no longer a worry over an appointment within three months of death - see S.14 Finance (No.2) Act 2015.

Ray Magill