Some years ago, clients created a lifetime Trust in relation to their residential property, naming themselves as life tenants. On the second death, the property passes to a Discretionary Trust. At the time, IHT was not an issue for them, but now their assets exceed the double NRB.
Is it just the existence of the Disc Trust which is fatal to the availability of the RNRB or is it also the creation of the Life Interest Trust itself? I think that as the property will be included in their estate for IHT purposes, that shouldn’t stop the RNRB being available and only the existence of the Disc Trust is the actual problem?
To resolve that - the Trust allows the Trustees to exercise a power of appointment during the Trust period. If we were to exercise the power of appointment so as to provide that on the second death, the property passes outright to the children rather than to the Disc Trust, would the RNRB then be available?
Buckles Solicitors LLP