Inheritance Tax Planning

Until October 2007, it was possible for married couples and civil partners to shelter the Inheritance Tax (IHT) Nil Rate Band (NRB) available to the Estate of the first to die from IHT which would fall due on the survivor’s death. This was typically done by creating a discretionary trust of the NRB by Will, which then took effect after the first death.

However, in October 2007, the Chancellor announced that the NRB for married couples and civil partners would be transferable in so far as the assets of the first to die passed to the survivor.

This means that if one of a couple dies, and leaves all the Estate to the survivor, the survivor’s Estate can then claim 2 full NRB’s at the rate applicable on the survivor’s death.

The first death can have been at any time but the second death must have been after October 2007 to do list app. There is generally no longer an IHT advantage in setting up a NRB Discretionary Trust in your Will, although, depending on market conditions, the value of certain assets may increase faster than any increases in the NRB, for example, building land.

Other important advantages remain, for example, in the protection of assets from being taken into account in a financial means tested assessment by a local authority for state benefits or nursing home care. A NRB Discretionary Trust is also advantageous in its flexibility to take account of the beneficiaries circumstances and the tax legislation at the time of first death.

The NRB is currently £325,000.

What to do next

Complete the online enquiry form or contact us by phone 01672 515 846 or email.