W made several lifetime gifts amounting to £72,000. These were within 7 years of the death.
W had previously made a gift of £40,000 into a discretionary trust 8 years before her death. She had not made any earlier gifts. Am I correct in thinking that the gift into the trust is disregarded given it was not within 7 years of the death?
I should be grateful for your comments.
The Trust is within 7 years of the PETs so in considering the nil rate band available to the PET you have to bring the CLT made within 7 years of the PET into account. Otherwise known as the 14 year shadow. So the NRB available to set against the PET is reduced by the earlier CLT even though it is more than 7 years prior to death. Think of it as a ‘regeneration period’ - it takes 7 years for the nil rate band to regenerate so when looking at the gift within 7 years of death you have to look to see if the nil rate band had fully regenerated or was still affected by an earlier chargeable gift.
Given the amounts in consideration I don’t believe it would have an impact as the remaining nil rate band available after reduction by the CLT would still cover the PET.