A (Husband) died on 10th February 2021 and B (Wife) died on 19th September 2022. Mirror wills were signed & witnessed in 1998 which included a NRDT with residuary estate to surviving spouse or equally to children on second death. New wills were drafted in 2008 simply leaving the estate to the survivor and children on second death. Signed and witnessed copies of these wills cannot be found.
On the assumption that the original wills stand the NRDT was not administered or settled and probate not obtained on the estate of A as the children assumed the estate passed wholly to B. The opportunity for a DOV has passed. The trust is non-specific as to assets passing into the trust. The trust included an expression of wishes that surviving spouse be treated as the primary beneficiary in both income and capital of the discretionary fund during her lifetime. The death beneficiaries are the children. The assets of As death would include a half share in the matrimonial home valued at approximately £500,000 (half share at death of A) and all other property comprising bank accounts, approx. £60,000 were held jointly. There is an equity release mortgage on the property to pay for live in care of £263,000 on he death of B. The total estate value on Bs death was £1,149,000 gross to include the value of the property.
The children now wish to sell the property.
Can members offer any advice on treatment of the NRDT within the estate of B, availability of nil rate bands, personal and residence, and any advice on how to proceed with the estate of B relative to the property.
Perhaps I am missing something, but from what you have said, it is the original Wills that are to be dealt with. As the assets on second death AFTER repayment of the mortgage are below the allowances, what seems to be the problem?
Thee will be two nil rate band allowances and two residential allowances, which negate any inheritance tax payable. Therefore, application to the Land Registry to change the title to the beneficiaries names, once the estate has been proved, would not seem to raise a problem? The solicitors who drew up the original Wills could be asked for clarification.
When H died, his Will left his NRB to his trust and residue to W. What exactly passed to the trust depends on the wording of the Will.
As nothing was done to administer H’s estate and trust before W’s death, my view is that all the assets fall into W’s estate, but W’s estate owes the NRB to H’s trust (so no TNRB is available, but the result is the same).
NRB and RNRB are available to W’s estate as normal.
The question mark is over the availability of TRNRB. H’s Will did not make an express gift of any of his interest in the residence but, depending on the wording of his Will, probably gave an amount which could not be satisfied without including part of his interest in the residence, wiping out TRNRB.
Alternatively, as all the assets passed to W’s estate, subject to the debt owed to H’s trust, perhaps it can be argued that full TRNRB remains available. I would like to see what others think of this.
The title to the property falls into and can be sold by W’s estate.
Thank you for your helpful reply. The wording in the will is simply “I give an amount up to the Nil-Rate Sum or property to the value thereof to my Trustees” and it is therefore non asset specific.
As the trust came into being on H’s death, we are beyond the period for a DOV, and the gift has not been funded I think, as you state, that this should simply be treated as a debt in W’s estate which will be neutral as far as a the TNRB is concerned as the values are the same.
With regard to the TRNRB you are again correct in your comment in that the nil rate sum could not be satisfied without including part of the value of the main residence. However, based on valuation it is likely that the value in excess of the nil rate sum in H’s share of the residence would satisfy the amount of the TRNRB I think this remains available.
I believe that following the first death, the Trustees of the nil rate band trust, the Trustees should have taken action to identify that part of the estate. However, even though they were lax in their duties as Trustees, it does not negate the fact that an amount up to the nil rate band allowance was ‘sheltered’ in the Trust that was created on death.
Where Trustees do not act as they should, it does not alter tha fact that a Trust was created on the death and only the amount above the nil rate band allowance of that estate was past to the spouse.
Calculations on second death should therefore be adjusted accordingly.