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IHT guidance

IHT guidance

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I wonder if anyone has some useful thoughts or guidance on the following ~ My Sister-in-law died recently, (I am a named Exor) and on looking at her Will (made in 2006) it allows for a NRB Disc. Trust (NRBDT). Given that under the new rules  I believe there is an ability to transfer the balance of her NRB to her husband on his death, it seems that the NRBDT isn't necessary (the joint wealth of the couple is much less than £325k x 2 & the split is fairly even, the main asset being the residence @ £310k). If the Exors where to amend the will via a Deed of Variation so to merely pass on all her assets to her husband, can contributors indicate what would be the likely cost? Do you also think there is a better route?

In completing the Probate application forms I am considering renouncing my position as Exor ~ mainly because of the geographical logistics. As I am named as a Trustee of the NRBDT, and if no changes are made, would my renouncement as Exor. also apply to the Truteeship, or would I remain a Trustee (but not an Exor and consequently not "capable" of applying for the Probate)?

Your thoughts would be gratefully received.

 

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By TaxationPete
08th Jul 2013 19:58

A DOV is required to remove the NRBDT. This would cost less that letting the NRBDT set up and admin costs. Regards Peter

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By LyneT
08th Jul 2013 20:46

I would say you are looking in the region of £1,000 to do a deed of variation.
A much cheaper alternative would be to appoint all of the funds to the wife.
If this is done within two years of the date of death it has the effect that the funds are deemed to have passed under the will.
An, yes, if you were to renounce your position as executor, you would also be renouncing your position as trustee.

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By RetiredTax
09th Jul 2013 09:31

Thank you both.

Lynn ~ can I assume you mean "appoint all of the funds to the husband"  ~ it was my brother's wife who passed away, leaving the NRBDT in her will? 

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Replying to lionofludesch:
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By LyneT
09th Jul 2013 10:40

Wrong way round

RetiredTax wrote:

Thank you both.

Lynn ~ can I assume you mean "appoint all of the funds to the husband"  ~ it was my brother's wife who passed away, leaving the NRBDT in her will? 

Yes, I have it the wrong way round.  The funds would be appointed to the survivor.  Sorry!
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By TaxationPete
09th Jul 2013 10:03

But that is a DOV The last one I dealt with cost £130 inc VAT. Regards Peter

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Replying to Robertwebb:
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By LyneT
09th Jul 2013 10:39

Not the same at all

TaxationPete wrote:

But that is a DOV The last one I dealt with cost £130 inc VAT. Regards Peter

 

No, appointing out the funds of the trust is quite different from a deed of variation. In a RPT, a trustee generally can appoint as much or as little as he chooses. A deed of variation re writes the will. Although the effect of appointing funds so there is nothing left in the trust has the same effect, it is different. The figure I quoted would be a figure for a suitably qualified solicitor (STEP preferably) to explain the effect and to draw up the deed.

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By Handa
09th Jul 2013 12:13

IHT & IOV

Just to add that DOV is now renamed as a IOV (Instrument of Variation). Whilst allocation of funds/estate to surviving spouse is the first suggestion that springs to one's mind, but by so doing you may also loose an opportunity to undertake estate planning on 1st death albeit of small estate. I would not jump to this course of action straight away without giving due consideration to other factors. We are not told some pertinent facts such as the ages of deceased and husband, his health at present, children, make up of estate  and value although house is main asset, number of executors etc.  An IOV could leave deceased's 50% share in a Trust giving Life interest to husband and other 50% share husband will own in his own right. This way one would have protected at least 50% of house from Local authority's clutches should a need arises for husband to be admitted in a care home. Although no IHT will be saved because on second death value of 50% wife's share will form part of his estate but it will be off set by having two NRBs. There will not be any GWR or Preowned asset charge providing each party pays running costs properly documented. CGT may be an issue but Trustees can rely of an exemption providing husband continues to live in the house until his death. Further care must be taken whilst registering the Trustees co-ownership of 50% at HMLR because many lawyers mess this work by not using correct wording and forms. For this to work the ownership of house will have to be on Tenants in Common basis and it will require suitable Deed of Severance to be prepared, please note this can be done after the death but with suitable wording. With regard to you resigning as an Executor and trustee, I would caution you because there must always be two executors in a Will because property cannot be owned by one executor whilst estate is being administered and also most standard clauses in a Will appoint executors as trustees as well so you will be resigning both positions . Also whether there is a power contained in the Will for executors to appoint additional trustees, if not you may have to make an application to the Court for appointment another executor and trustee . You will need to complete IHT return even though it may be below the limit. I would not do the probate yourself. I would recommend that you seek services of a lawyer of at least 5 or 10 years experience in probate and estate matters preferably a STEP member. Don't be shy of asking the solicitors the experience they have and average high street firm will charge you 185 - 200 per hour for a person with such experience for this work. My estimate will be £1,000 - £1,500 for work. Trust that I have not confused. As an accountant I have worked on these matters and always engaged tax specialists/barristers to draft documents because many solicitors are out of their depth.

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By TaxationPete
09th Jul 2013 19:52

An excellent response. It is also important to address this if the surviving spouse has any business in operation as the NRBDT excludes this from any potential claim if the business meets hard times.

Excellent response and guidance

 

Regards Peter

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By RetiredTax
12th Jul 2013 21:20

Many thanks for your thoughts and advice

 

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