Will Writing

Eddie is 72 and has been a client since 1994. We have advised Eddie and his wife Jane about how to arrange their wills in a tax efficient manner where we arranged to include a discretionary Trust to use their Nil Rate Band ( NRB ) when they die. Each one of them is a potential beneficiary of the others NRB discretionary trust.

We were aware of Jane’s circumstances. Her first husband had died in February 1995, leaving all his assets to Jane. We were not her adviser at the time – and she was not alerted to advice with regard using a Deed of Variation within two years of David’s death, so his NRB was not used on his death. Jane remarried five years ago.

We contacted them some time ago due to the introduction of the transferable NRB in the 2008 Finance Act. We wanted to alert them of the fact that it might now be possible to resurrect David’s NRB, which went unused when he died. This could show a considerable inheritance tax saving when they eventually die.

This means whoever dies first, Eddie or Jane leave their wills as they are, the second of them to die (or to be accurate their personal representatives ) may effectively claim 100% extra NRB current at the date of the second death on account of David not using any of his NRB when he died. It is important to ensure the right documentation is available and the documents that existed at the date of David’s death are fully examined – and the options fully explained. It is not an easy concept to explain…

Jane could revoke her will and revise a new will to include a discretionary trust at twice the NRB current at  date of her death. Eddie’s would be left as it is so his NRB will be used on his death whether this occurs before or after Jane’s.

Eddie and Jane decided not to take up our suggestion but to rely on their personal representatives to claim David’s NRB if Jane’s personal representatives have not already made use of it on prior to Jane’s death.