Intestate

Tuesday, September 07, 2010

NRB Discretionary Trusts

6 January 2008

In a recently published article solicitor David Emery-Jones answered questions on Inheritance Tax provisions.

A particularly useful answer was given to the following question:- ‘ Given the changes in inheritance tax following the pre-budget report, is there any point in my wife and I having nil rate band discretionary trusts drafted?’

After explaining previous use of nil rate band trusts and the new provisions that were introduced in the pre-budget report Mr. Emery-Jones went on to say the following:


‘While the nil rate band discretionary trust wills have lost their appeal from an IHT perspective, this is not wholly fair, and it also highlights the historic reasons for creating trusts.


While tax planning had been a valid reason for creating a discretionary trusts, another important function is protection, whether from third parties or from reckless beneficiaries. Second marriages are increasingly common and the safeguarding of the nil rate band of the first to die may be the

preferred option if there are children of the first marriage who may be prejudiced.

Nil rate band discretionary trust wills have typically been drafted to provide trustees with powers far in excess of those granted by statute to let them operate it in the most flexible way. Having nil rate band discretionary trust wills, as opposed to more straightforward wills in which everything is left to the surviving spouse or children provides the executors with greater flexibility. If family circumstances at the time are such that it is appropriate to ring-fence the nil rate band of the first to die in the trust, this is the option that the trustees can take. They may wish, for example, to use money in the trust to benefit children or grandchildren.’



Mr. Emery-Jones then concludes with a very valid point:



‘The changes in the Pre-Budget report are effective from 9 October 2007, although they are yet to be made law by the 2008 Finance Act. While assurances have been made that the changes are set in stone and will be ratified by the legislation, this cannot be taken for granted’.

<< January 2008 >>
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31  

recent posts

archives

Do you know what Intestate means?
 
Yes
No
 

view results

rss feed

Disclaimer