Lifetime trusts precedents book - preserving the RNRB

Trusts Discussion
1

Hi

I am looking for recommendations of books with precedents that specialised in lifetime trusts and the preservation of the residence nil rate band.

Thank you in advance.

Marcela

2

I have used James Kesser KC’s book with precedents Drafting Trusts and Will Trusts from Sweet & Maxwell since the first edition, now in its 15th. It is unwise to use a precedent without full understanding of its purpose and this book does that in an exemplary way. I have only ever needed to go to the major works for specialised precedents. I also commend A Practitioners Guide to Wills by Lesley King and others published by Wildy. They are both great value whereas practitioners’ tomes are now selling at ridiculous prices

Jack Harper

3

Thank you Jack for your kind reply. I have both books however they do not deal with drafting lifetime trusts so as to include the preservation of the RNRB.

Kessler’s lifetime trusts precedents are basic IP or DT which do not preserve/protect the RNRB, hence my question about specialised books.

Regards

Marcela

4

Mr Kessler deals at length with with this issue in his chapter headed Will Drafting.

There is no need to say anything about lifetime trusts except this: If you make a lifetime trust and at your death it holds a residence that residence will not attract RNRB on your death because that relief only applies when it is part of your s4 estate: s8D(1) IHTA.

So putting your residence into a trust or your trustees purchasing it with trust funds means that it will not attract RNRB on death and it is a potential downside to be balanced against any, indeed many, other tax and non-tax advantages or disadvantages to be derived from doing so.

That is why the drafting skills are focused on whether and if so what type of trusts should be in a Will to ensure that RNRB is attracted on the testator’s death and on a later death e.g. an absolute gift, an IPDI or a DT that can be finessed under s144, not forgetting that with an IPDI the issue will arise again on the future death of the QIIP owner. Mr Kessler discusses the options and their pros and cons at length.

So you will not find any precedent of a LT trust designed to preserve the RNRB because it cannot do so.

Jack Harper

5

Thank you Jack for your reply. There are firms selling lifetime trusts which preserve the RNRB so there must be precedents of this sort somewhere in the specialist literature and I would presume (some?) STEP members are aware of them.

Kind regards

Marcela

6

Hi Marcela,

The trusts to which you refer do not “preserve” the RNRB per se. Most of the lifetime trusts that fall into this category either carve-out the RNRB as a bare trust (within the settlement deed) or set the trust period to end before the settlor’s death. With the latter approach, the property will pass via the deceased’s Will and, of course, the RNRB can be claimed.

7

Thank you Paul for your reply. Those are the situations I was referring to and I am trying to find relevant drafting literature.

Kind regards

Marcela

8

I only know of Countrywide, Trust Docs and Acer Prime who are respected in this area so perhaps you’re best contacting them directly.

9

Thank you Paul for the information.

Kind regards

Marcela