Grossing up legacies

Trusts Discussion
1

I have an estate where there are a number of “free of tax” legacies (cash gifts and one specific gift of the deceased’ home) and then the residue is left to charities. The total value of the legacies exceed the deceased’s nil rate band (there is only £325,000 available).

It is my understanding that the legacies will need to be grossed up so no problem there but this means that the residue amounts to nothing for the charities after payment of the IHT and that the legacies (being the cash gifts and not the gift of the home) start to abate meaning that the cash gifts are payable but not in full. The gift of the house will not abate.

It occurs to me that this is rather unfair to apply grossing up in these circumstances but do forum members concur that it is correct to do so here?

Jensen Bourke
Bennett Oakley

2

I do not think it unfair in the circumstances stated.

However, you may wish to consider if the testator was properly advised when the will was prepared - if only because a charity might query this?

Kevin Mullen

3

Thanks Kevin

Yes the firm prepared the Will and there is an attendance note that the client was advised about grossing up on this matter.

Jensen Bourke
Bennett Oakley