IWC are regulated by the Society of Will Writers and Estate Planning Practitioners

 

If you are married and you and your husband or wife made your Wills prior to October 2007 and at that time your estate was considered to be over the nil rate band (£298k at the time) there is a very real possibility that your will included a Discretionary Trust. If so, it is time to review your Will.

 

This does not necessarily mean that you should remove the discretionary trust it means the time has come to review your estate plan.

In Oct 2007 the government introduced what is known as the transferable nil rate band. Simply, a married couple can now transfer their inheritance tax free allowance to each other so that on the death of the second spouse the estate would benefit from two tax free allowances. Wills which included the Discretionary Trust clauses generally transferred the first persons nil-rate band to a Discretionary Trust thus maximising the allowances at the time.

 

If you do not update your will or review your estate plan, it may be that if you were to die the discretionary trust would need to be closed. The cost to close the discretionary trust, which is automatically set up the moment you die, is far more expensive than redrafting your will. The inland revenue will accept that provided the Discretionary Trust is closed within two years of death but not before three months after death, the second persons estate would still qualify for the double nil rate band allowance.

 

If the second spouse to pass away were to live another 20 years after the first spouse passed there is a very real chance your estate would now pay more tax if the discretionary trusts was implemented.

 

The discretionary trust is a complex mechanism, if you do not understand the concept of the outline above you need to call us!

 

 

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