I wonder if you can assist. Within two years of the passing of the first spouse, the surviving spouse varied the Will to create a nil rate band discretionary trust. The available nil rate band at the time of death of the first spouse was £263 000. However the assets in the estate of the first dying spouse was less than this amount, leaving a percentage that can be transferred to the estate of the second spouse on the death of the surviving spouse.
The surviving spouse has passed. The Nil rate sum was indexed linked. Would the index linking effect the amount available to be transferred on the death of the second spouse.
No, the proportion of the original nil rate band that can be transferred depends entirely on the transfer at death. [the first death]
Andrew Goodman
Osborne Clarke LLP
I presume from your question that the amount which was included in the index linked legacy was subsequently loaned to the surviving spouse on him/her signing an agreement providing for index linking of that amount. The indexed amount will together with the loan be a liability of that spouse’s estate. If the beneficiaries of the trust and the second spouse’s estate are the same, I would recommend that the trustees waive the indexation sum as it is liable to tax it in the hands of the trustees.
Hi Patrick thanks I am aware of that. I am more concerned as to whether the indexation effects the amount of the unused nil rate band that can be transferred to the estate of the second spouse. In this case the property was assented to the surviving spouse with a charge in favour of the nil rate band discretionary trustees.