RNRB and rights to occupy

Trusts Discussion
1

Hi, I’m having a moment and wondering if I can check if I am correct in my understanding of the RNRB in this scenario.

Husband and Wife on second marriage living in Wife’s home which has a value of approximately £300K. Her total assets including the home are worth in the region of £540K. The house is in her sole name.

Husband also has a house in his sole name which is a holiday let. His total estate including the house is in the region of £290,000.

They both have children from their previous relationship.

Wife is considering giving Husband a Right to Occupy in her Will. The property would pass to her children when the right to occupy comes to an end. If she dies first, am I right in thinking that there will be no RNRB available on her death?

When he dies, the value of the property will be included in his estate for IHT purposes (unless he moves out of the property 7+ years before his death) but presumably he would be able to claim his wife’s unused nil rate band in respect of the property?

Am I right in thinking that the RNRB and the TNRB would be lost on his death as the property in which he had a right to occupy was in his wife’s sole name.

If he moved back to his property before his death, presumably, the RNRB would then be available if he gifted that to his children? However, am i right in thinking that the TRNRB would not be available as his wife never lived in his property and it was in his sole name.

Thank you for any input given.

2

On the wife’s death, RNRB cannot be claimed as the home is not “closely inherited”.

However, if the husband remains in occupation until his death, both his RNRB and his late wife’s (transferable) RNRB will be available if the house then passes to the wife’s children - i.e. his step-children.

To the extent that it was not utilised on her death (or by gifts within the 7 years before her death) the husband’s estate will be able to claim the transferable nil rate band from his late wife.

IHT looks to the beneficial interests, and not the legal title so that the fact the hose had been in the wife’s sole name is not necessarily a relevant factor.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals