Residential Nil-Rate Band / Nil Rate Band Discretionary Trust

Trusts Discussion
1

Just want to be absolutely certain on the following points and your replies would be greatly appreciated:

  1. Is it the case that if there is a Nil Rate Band Discretionary Trust in the Will of a married couple (with index-linking provisions), that neither would qualify for the Residential Nil Rate Band even though the beneficiaries are spouse and direct descendants.
  2. If the estate was varied within two years of death appointing out, would that then allow the estate to qualify for the RNRB?
  3. Is it unlikely that, even with the index-linking provision and remaining spouse surviving a number of years, that this would be better than making use of the RNRB? What is the current view on this?

Thanks

Sarina Clayton
Taylor Walton

2

  1. correct

  2. correct-if an appointment of a property interest attracting the RNRB was so appointed in favour of direct descendants

  3. as always, it depends

Simon Northcott

3

There seems to be some confusion here as you refer to “the Estate” and “the Will”. Clearly, there are 2 people here and, therefore 2 Wills and 2 estates.

On the first death, the RNRB would be unused as only the standard NRB could pass into the discretionary trust. The usual format for such Wills is for the residuary estate to pass to the surviving spouse. It is also usual for a charge scheme to be used in such circumstances so that the 1st spouse’s share of the property does NOT pass into the discretionary trust but to the surviving spouse under the residuary gift.

I assume that, on the second death, the survivor’s estate then passes to direct descendants, in which case there should be one standard NRD, one RNRG and one transferrable RNRB.

Graeme Lindop
Coles Miller Solicitors LLP