I am advising a married couple. H is recently widowed and has two teenage children from his first marriage. Estate worth around £3.5 million and includes a shop (registered with same title as matrimonial home, which is in H’s sole name). W not previously married and has no children. Estate of around £700,000, including her former home. Couple most unlikely to have children due to their respective ages.
They want to provide security for each other but ultimately to pass assets to their families (H to his children, W to her brother and his family).
I have advised:
- For H: NRBDT of his late wife’s NRB; flexible IIP of residue for W, then to his children (possibly at age 25 but tbc)
- For W: flexible IIP of residue for H, then outright to her family
- Should H’s NRBDT also include his own NRB? I can’t see an advantage to doing so, and in addition it will not benefit from any increases to the NRB, however the precedents vary as some include both and some (e.g. James Kessler’s) only the late spouse’s NRB.
- Currently H’s estate would not qualify for the RNRB but would you advise including a gift in the will of H to claim this on his death (if he dies first) if it is available at that point? Again, should it include just the late spouse’s transferable RNRB or both of their allowances? Alternatively, could the trustees exercise the overriding powers in the flexible IIP to create an RNRB gift for the children and would that be read back into H’s will for IHT purposes if exercised within two years of H’s death?