Residence allowance

Trusts Discussion
1

A (healthy) retired client wishes to sell his property at full market value to 1 of 4 children. That child will then move in to the property with him. His intention is then to distribute the monies received by way of a PET to help each child.

Deprivation of capital is not a real concern given the extent of his other capital wealth and substantial pension income, which collectively will cover any potential care fees.

My initial concern relates to the RNRB and whether this is still due given there is not a sale at arms length.

Any views welcome

2

You say the property is sold at full market value although this is not necessary to secure the RNRB on death. A gift or sale below market value may still allow RNRB.

The RNRB is available due to the downsizing allowance as on death your client will not own a residence.

On the client’s death he will need to leave £175,000 to lineal descendants to obtain the full £175k RNRB.

I have assumed the value of his current residence is at least £175k.

Malcolm Finney