NRBDT unconstituted

Mrs X died recently. Her husband died 10 years ago. He had 2 Wills, a UK Will covering assets in England & Wales and a Jersey Will dealing with Jersey assets.

The UK Will included a NRBDT with the usual terms

“I give to my trustees the largest sum of cash which could be given on the trusts of this clause without Inheritance Tax becoming due in respect of the transfer of the value of my estate which I am deemed to make immediately before my death …”

and a gift of residue to wife. The executors (the sons) ignored the trust and transferred all assets to the wife including the house which was in the husband’s sole name. The Jersey Will left everything to the sons which in effect was a gift of a Jersey property valued at £315,000.

I know that the gift to the NRBDT can be shown as a debt on the estate of the wife but the question is, is this £325,000 or £10,000 (ie the balance of the gift given to the sons)?

I would welcome any thoughts.

On the understanding that the husband was domiciled within the UK the Jersey property would be subject to IHT although, as the value is within the IHT nil rate band, no IHT would be payable. However, it will reduce the NRB, so that the NRB gift will be the reduced amount - £10,000.

However, in order to claim the relief in the widow’s estate, the debt to the trustees of the NRB trust will need to be satisfied (s.175A IHTA 1984).

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals