RNRB – What to do with Wills ……

 In Gill's Blog, Wills

Disclaimer: LawSkills provides training for the legal industry and does not provide legal advice to members of the public. For help or guidance please seek the services of a qualified practitioner.

…containing IPDI trust in favour of spouse; remainder on discretionary trust?

Gill Steel Blog prefIn discussing what approach to take when reviewing old Wills for the purposes of achieving the RNRB and TRNRB on the surviving spouse/civil partner’s death concern was expressed about a common form of Will:

Alec & Barbara being married with adult children and grandchildren made mirror Wills leaving their respective estates to each other on IPDI with the remainder interests on discretionary trusts for a wide class of beneficiaries including all their children and grandchildren.

If Alec died before 6 April 2017 he would not have used his RNRB by the use of this Will and it will in principle be available for carry forward, subject to taper threshold limits.

If Barbara was now to die the discretionary trust for children and grandchildren will not be a type of settlement which will secure Barbara’s RNRB. However, she did not create the discretionary trust which is in operation, Alec’s Will did.

FREE monthly newsletter

Wills | Probate | Trusts | Tax  | Elderly & Vulnerable Client

  • Relevant learning and development opportunities
  • News, articles and LawSkills’ services
  • Communications which help you find appropriate training in your area

I have looked into the combined effects of ss 80- and I44 IHTA 1984 to see if the effect of s.80 would be to deem the discretionary trust as being comprised in a separate settlement which the surviving spouse created, thus possibly providing two years from Barbara’s death to re-organise the trust under s.144 IHTA 1984.

Having studied these sections this cannot work because s.80 only applies for the purposes of Chapter III of the IHTA 1984 and s.144 is in Chapter 5. Also, the wording of s.144 makes it clear that it cannot operate if there arises an IPDI between the creation of the settlement by Will and the expiry of two years from the creation of that settlement.

As a result, these popular style Wills will need great care – on the first death and during the lifetime of the surviving spouse the trustees will need to exercise their powers of appointment to appoint the remainder interests absolutely to such of the children and/or grandchildren as is appropriate in the particular case so that on the death of the life tenant (or earlier termination of the life interest) the remainder interests vest in lineal descendants so preserving the RNRB of the surviving spouse.

Still getting to grips with RNRB?

...we can help

Get in touch to make a date for a facilitated team discussion around the RNRB
email sue.sheppard@lawskills.co.uk to check availability and pricing.

You may find Gill Steel’s forthcoming webinar “RNRB Update” of interest

Date: 29 June 2017 (recordings available after this live broadcast)
Time: 1pm-2pm

Please contact LiPS Legal for webinar bookings and more information

The LawSkills Monthly Digest

Subscribe to our comprehensive Monthly Digest for insightful feedback on Wills, Probate, Trusts, Tax and Elderly & Vulnerable client matters

Not complicated to read  |  Requires no internet searching |  Simply an informative pdf emailed to your inbox including practice points & tips

Subscribe now for monthly insightful feedback on key issues.

All for only £120 + VAT per year
(£97.50 for 10+)

Lawskills Digest
Recommended Posts
Brussels IV post BrexitCan a solicitor release the Will of a mentally incapable client to their attorney?