Value of IOU to NRB DT

W died over two years ago with NRB DT in her Will. Her assets were a 50% share in the matrimonial home (worth £250k at that time) and £20k cash. Nothing was done to administer the trust. The trustees have now decided they should do something to deal with the trust and wish to use the debt scheme. The 50% share in the house is now worth £312k. Should the debt assumed by H be for the value at the date W died, or value of the 50% share plus cash now?

If one assumes the amount due under the NRB to be the full nil rate band at the time of death, the trustees are entitled to whatever that amount was, plus intertest from the first anniversary of death.

The trustees’ entitlement is to be ascertained as at the date of the distribution. In this case, as the legacy is to be satisfied using the “debt scheme” (which can only be adopted if authorised under the terms of the will) the amount of the debt would be the equivalent of the legacy that could be satisfied.

In summary: the debt assumed by H should be the value of the 50% share plus cash now

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals