An unmarried couple presently own a property worth £700k 60% (for him) / 40% (for her). Their current Wills leave everything to each other and on second death split the estate between the respective children. Assuming each party has an estate over £325k there will be some IHT to pay on 1st death but on 2nd death the estate will benefit from (some) RNRB.
They would now like to create a life interest trust in respect of the property. If Mr dies first leaving his 60% share in a LIT to the surviving partner with gift over to his children, it would seem as though there is IHT to pay on his death and no RNRB for his children following death of the unmarried partner.
The net effect of creating the LIT seems to potentially increase the IHT liability. Am I missing something? It seems unfair when compared to the current position.
Brewer Harding & Rowe