Inheritance Tax Advice

Lady has died leaving her husband (in care and has lost capacity) and three daughters.
Her estate for probate purposes is approximately £900,000.

She made £100,000 in gifts during her lifetime (all within 7 years)

Husband is alive and his estate is approximately £600,000. As mentioned he has lost capacity but one of the daughters has

Her will sets up a Discretionary Nil Rate Bank Trust, the Trust Fund equal to NRB less any lifetime gifts i.e. a sum of £225,000

Thereafter her will provides a lifetime interest trust for her husband and then passes to the three daughters.

They sold the family home as they both lived in care.

The family are looking at the inheritance tax situation for both estates.

My understanding is as follows:

There is no inheritance tax to pay on the first death and we have utilised the whole of the nil rate band for the lady. The amount to go in the NRB Discretionary Trust is £225,000

When the husband dies his estate will be added to the value of the lifetime interest trust. He will have his own nil rate band and his residence nil rate band.

Please could you confirm the following:

1/ The maximum that can go in the NRB Discretionary Trust is £225,000 ? Is there any way that we can use the residence nil rate band or is it the case that the existence of the NRB trust negates this.

2/ The lifetime trust can be appointed out to any of the beneficiaries, husband, girls etc. Is there any advantage to appointing this out?

3/Can I use the husbands NRB on his death plus the downsizing addition for both him and his wife?

Many thanks for any advice.


Depending on the wording of the NRB gift, it might also capture the RNRB downsizing allowance attributable to the wife following the sale of the family home

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals