Residence Nil Rate Band Gift?

Trusts Discussion
1

Can any one help with this one?

I have a Client who is married, second marriage, and has children from her first marriage. On her death, if she is the first to die, she wishes to make a gift of the current Nil Rate Band amount to her children.

On the basis that her Residuary Estate will pass to her husband absolutely, she stands to lose the RNRB as her husband can not leave the Property, (which will hopefully be included in her RE, this is her sole asset), to a direct descendent, as he does not have any.

She does not want to leave the Property on a Trust of any kind, if she can help it.

Is there a way round this? is it possible to leave a gift to the children of the RNRB amount as well as the NRB, or a share in the Property to the value of the RNRB or can this not work?

Or should she leave the property to the children up to the combined value of the NRB and RNRB , with the appropriate Residence clause/Life interest for the Husband?

Any advice greatly appreciated.

Emma Hatswell
Male & Wagland

2

If the property passes to the children under the husband’s Will, the RNRB is available, as it passes to his step children

Simon Northcott

3

Could the husband leave the property on to her children. My reading of the direct descendants test is that they would be his step-children for the purposes of the test even if his wife is widowed?

You said the only asset she has is the property so would that not form part of the gift to the children anyway? Could you sever the tenancy and leave her share on life interest to husband and then on to children?

Paul Mounce
Graham & Rosen

4

Thank you for your replies- of course the RNRB applies to the Step-children! I had completely forgotten that!

Emma Hatswell
Male & Wagland