Where a Will leaves pecuniary legacies to non-exempt beneficiaries and the residue to a discretionary trust, will the discretionary trust benefit from the full £325k NRB moving forwards or will it be reduced by the legacies?
The NRB is applied to the estate as a whole not to individual gifts. Pecuniary legacies do not bear their own tax so must be paid out of the estate net of IHT if it is sufficient. What remains is residue and goes into the DT. The trustees will have a full NRB for future IHT exit and TYA charges if the deceased had a nil cumulation at the time of his/her death and (this appears to be the case) there are no “related settlements” i.e. the Will contains only the one settlement.
Jack Harper
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| E66289 Ed Granger
21 April |
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Where a Will leaves pecuniary legacies to non-exempt beneficiaries and the residue to a discretionary trust, will the discretionary trust benefit from the full £325k NRB moving forwards or will it be reduced by the legacies?