Q&As

The deceased died intestate leaving a surviving partner, who was neither a spouse or civil partner, and children. The children have agreed to create a settlement leaving a life interest trust for the surviving partner. Currently, the estate is free from inheritance tax due to the available residence nil rate band (RNRB). If the children create the settlement, does the estate lose the RNRB?

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Published on LexisPSL on 02/07/2021

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • The deceased died intestate leaving a surviving partner, who was neither a spouse or civil partner, and children. The children have agreed to create a settlement leaving a life interest trust for the surviving partner. Currently, the estate is free from inheritance tax due to the available residence nil rate band (RNRB). If the children create the settlement, does the estate lose the RNRB?

The deceased died intestate leaving a surviving partner, who was neither a spouse or civil partner, and children. The children have agreed to create a settlement leaving a life interest trust for the surviving partner. Currently, the estate is free from inheritance tax due to the available residence nil rate band (RNRB). If the children create the settlement, does the estate lose the RNRB?

This Q&A assumed that:

  1. the children will execute a deed of variation to create the life interest in the estate for the surviving partner, with remainder to the children

  2. the children are all adults and have full mental capacity

If the children execute a deed of variation which falls within section 144 of the Inheritance Tax Act 1984 (IHTA 1984) to give their respective beneficial interests in the estate to an interest in possession trust for their deceased parent’s unmarried partner/cohabitee, the deceased would be treated for all inheritance tax purposes as having

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