Hs Will has IPDI to W in 1/2 property. Residue on Discretionary Trust. Hs estate administered professionally but not complete. Prop Trust not constituted and they still hold residue - approx. £60K. 1/2 house currently worth in region of £350K.
I have been instructed re: Ws estate. Approx: £425K including 1/2 house. Mirror Will but as W survivor all to Discretionary Trust.
I am considering Deed of Appointment from Hs Will Trusts straight to children as within 2 years, they want me to arrange this.
My thoughts are doing this would all be covered by Hs available NRB (approx. 275K as failed PETs made) and RNRB for his estate as within two years of death (if done before May 2021). Would the company who dealt with Hs estate need to do anything and I just prepare the Deed of Appointment?
For Ws estate, appoint all out so have available NRB (again failed PETs) and RNRB.
I agree with the approach regarding W’s estate. That will allow the NRB and crucially RNRB to be used. Not sure I follow regarding H’s estate. My understanding is that an appointment from the IPDI within two years or otherwise does not ‘work’ for the purposes of claiming the RNRB.
Thanks Haroon. I was also wondering re: the IPDI aspect. But then the IPDI should allow Transferable RNRB as aggregates with Ws estate. Or is that lost as now passes to the DT following Ws death as per Hs Will? But then we are still within 2 years of Hs death so if appoint out from DT, that should be ok. If I am thinking about this right that is.
My other thought is, as Hs residuary estate approx. £60K, we would have remaining NRB to transfer over after appointing that to the daughters from his DT.
The problem with the RNRB is that it (the residence) has to be inherited ‘on death’, and in this case on death of H, the IPDI inherited, and on death of W, the residuary estate of H inherited (I think). The reading back does not help as it relates to discretionary trusts not IPDI’s.
As to your second point, I agree that any unused NRB can be transferred across to W’s estate.
But if falling into Hs residuary estate i.e. the DT, then this does so within two years of Hs death…so would reading back apply even though its ended up in the DT via the IPDI?
Ws estate will need the TRNRB to avoid IHT so I am keen to explore all options.
If I understand you correctly (and as I believe Haroon comments) the so-called “reading back” (IHTA 1984 s 144(4)) applies automatically assuming the section’s conditions are satisfied. One of these conditions (s144(3)(c)) is that within two years of death and before an IPDI has subsisted in the trust property … In your case an IPDI will have arisen and hence no reading back.
H’s estate will thus not be entitled to a RNRB although it will be transferable to W’s estate providing W’s estate with a maximum £350K of RNRB.