Since the Chancellor’s speech on inheritance tax, do I need a property trust or a nil rate band trust?
The simple answer is yes to both; it now will depend on what you want and on what you need. There is greater flexibility to use combinations of both, or none. In fact we will be advising you based on your personal circumstances the best way to achieve their desired result and not based solely on tax or care matters. We will treat a couple who are in their second and third marriage differently from a couple who have been married for twenty years or more, simply because trust between them is more likely to be a factor in one rather than in the other. Making first death gifts in many cases will be a reality without affecting the financial stability of the surviving spouse, as only part of the nil rate band needs be used and the balance carried forward; and of course the use of the Property Trust can be far wider owing to the way tax can and will be calculated on second death.
Further Advice
If we have a standard nil rate band trust will and the trust is implemented on the first death that will fully utilise the current nil rate band of £350,000, leaving nothing spare. If no appointment of funds is made within 2 years of the death on the second death after 2010 there will be £350,000 nil rate band available so the family will benefit to the extent of £700,000 overall. If the trust had not been implemented on the first death then doing nothing would have resulted in £700,000 nil rate band being available overall, or the appropriate figure depending on the nil rate band at the time of first death.
If only part of the nil rate band is used on the first death, for example for chargeable legacies use up 50%, then the unused balance is available on the second death. If the nil rate band has been increased by the time of the second death then the new amount is available but reduced proportionately, i.e. in this example 50% of the increased amount will be available to be added to the nil rate band on the second death. The difficulty is that we cannot just ignore the nil rate band legacies given in these wills and it is likely that the NRB trustees must take positive action to ensure that the full amount of the NRB is available on the second death. This will mean that they must establish the trust and appoint the fund within 2 years (but not within the three months immediately following the death) to the surviving spouse. This will ensure that the full amount of the nil rate band from the first death will be available to add to that on the second death, this assuming that there are no other chargeable gifts on that death. This can appear to be a complex area, but with personal advice your needs can be addressed to your best advantage.
Save your home from care fees
and protect your family’s inheritance
FREE ADVICE NOW from Philip Head
Legacy Legal Services
For Further information call LEGACY Legal Services on:
0800 959 6171
Home visits: Tel. 0800 959 6171
www.LegacyLegalServices.org.uk
15
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40