People should revise their wills to make sure they take full advantage of inheritance tax rules.
From April last year, the Residence Nil Rate Band (RNRB) was introduced, with the aim of taking the family home out of the scope of inheritance tax (IHT), by effectively increasing the threshold for married couples and civil partners to £1 million (or £500,000 per spouse) .
But there are people who may have discretionary trusts written into their wills which would take precedence over the RNRB rules and means they could miss out.
It was common once to write a nil rate band discretionary trust into a will, to enable property and possessions to be left to the spouse without being liable to tax. With the introduction of the transfer of the nil rate band where the deceased has left everything to his or her spouse (and the new Residence Nil Rate Band) in most cases these are no longer necessary. In fact, if you have a discretionary trust incorporated in your will, it means you lose out on the some of the benefits of RNRB.
This means that now, more than ever, it is a good time to revise your will, or to write one, if you’ve yet to do so.
But the Residence Nil Rate Band is not straightforward and there are separate rules governing downsizing, moving into residential care, and second homes. These circumstances are anything but simple and very careful advice is recommended if you fit into any of these categories.
If you would like to talk to the legal team here at Optimum about writing a will, or revising an existing will, please get in touch.