We have been asked to look at a Will to help the executors/Trustees understand whether the Will creates one trust or two. The wording is unusual clause 6 creates a Discretionary Trust of any remaining NRB, but the wording in brackets is causing confusion. Does the gift off ALL the residue at 9.1 override the creation of the remaining NRB DT at 6?
6.1 This clause shall not take effect unless the gift made to my Husband by clause 9.1 of this Will takes effect (or but for the existence of this clause would do so).
9.1 I give ALL the residue of my estate……on trust to pay its income to my husband for life….
The only reference to clause 6 in clause 9 relates to Trustees powers. Clause 6 creates a DT of the remaining NRB.
Is there one trust or two?
Number One Legal
The wording is standard from Practical Will Precedents. The words in brackets are intended to cover the possibility that there is insufficient in the estate to discharge the NRB legacy and have funds left to form the residuary estate. If there is no residue then, even if there is a surviving spouse, the gift in clause 9 cannot come into effect in practical terms. However, the words in brackets mean that if the gift in clause 9 would have come into effect had there been no clause 6 then the gift in clause 6 is saved.
Coles Miller Solicitors LLP
This looks to be what was, at one time, relatively common – the creation of a nil rate gift only when residue passes to the testator’s surviving spouse.
On the basis that there is nothing further to affect the provisions, so long as the husband has survived so as to be entitled to any residuary estate, the NRBDT will take effect. This will be the case even if the estate is insufficient to fund the NRB in full, so that the husband will effectively receive nothing.
If deceased’s estate is entitled to the transferable NRB from a deceased husband a further question arises - is the NRB gift only of the deceased’s NRB or does it include any transferable NRB?