I apologise if this has been asked before but I could not find an answer on the forum addressing this specific situation.
The testator is a single woman with two adult children and a granddaughter whom she is raising as a child of the family.
She wishes to grant one of her children (S) a right of occupation in her home for a limited period, and thereafter the property is to fall into a discretionary trust for the benefit of all her children and grandchildren.
As I understand it the RNRB will be available on death as the right of occupation for S will be an immediate post death interest, but what then happen when S gives up occupation, or the period specified in the Will comes to an end? Is there a minimum period of occupation which is required for the RNRB to be available to the estate?
Any guidance on this point would be greatly appreciated.
Ewings & Co. Solicitors
There is no time limit specified for an IPDI to qualify for RNRB.
However, upon termination of S’s right of occupation, the trust will pass into the relevant property regime giving rise to a chargeable transfer, with IHT payable at 20% (with a further IHT charge arising if he dies within 7 years, subject to taper relief).
Is this a satisfactory outcome for either the trust or S?
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Thank you Paul for your helpful explanation.
There is no minimum time period which needs to be satisfied for the IPDI to subsist. The issue for RNRB purposes is simply whether on death the qualifying residential interest was closely inherited.
On termination during S’s lifetime, S makes a chargeable transfer equal to the value of the property in which the interest subsisted. Any IHT charge is the liability of the trustees.
I have a similar situation whereby a surviving spouse (B) has died leaving by her Will one of her two adult children a right to occupy the home for two years and at the end of the two year period the house passes absolutely equally between her two adult children. First spouse (A) died in 2006 leaving the whole of his estate to his surviving spouse by his Will.
Having read the above I assume that the RNRB can now be claimed by B’s executors and the unused RNRB can also be transferred and claimed from A’s estate.
Is this correct?
On B’s death, right to occupy gives rise to an IPDI and hence is closely inherited. B’s executors can therefore claim B’s own RNRB inflated by 100% due to transfer of B’s spouse’s RNRB. Aggregate capped at lesser of £350k and value of B’s residence.
Thank you for confirming that Malcolm