NRBDT confusion and mess

Trusts Discussion
1

Husband & Wife sign Wills in 2000 creating a NRBDT on death remainder to Spouse. Trustees are Surviving Spouse plus 2 Children. Wide powers of appointment to Discretionary “Objects” - (includes Wife & Children). No updating of Will since then.

Husband dies 2020. IHT Office agree use of NRB (325000) and Exempt balance of Estate to Spouse (as per Will).

However Wife and Children then proceed to split all Estate assets - all Joint assets to Wife (in excess of Exemption previously claimed) and balance to Children. No Deed of Variation and DT appears to have been ignored.

Wife dies recently and Executors (Children) hope to claim 2x NRBs! less £value of Assets owned by Husband in his own name! plus 2x RNRBs.

You probably agree that they cannot, but,

  • what happened/ happens regarding DT? Can we assume that was closed?
  • what happened/ happens regarding part loss of one NRB?
2

  1. I don’t believe you can assume the DT in husband’s Will is closed. The assets of his estate are due to the Trust (to the value of the NRB) based on the value at the date of distribution.

  2. H’s NRB appears used up. (The assets now in wife’s name that belong to the H’s DT can be regarded as a debt against her estate, but this does not affect H’s NRB.)

Note - both RNRBs may be available if the conditions are present for wife’s estate.

Ihsan Ali
I Will Solicitors Ltd

3

I agree with Ihsan and it is all too common. HMRC are well aware IHTM43016

Jack Harper