Q&As

The deceased's Will includes a nil rate band discretionary trust and authorises trustees to permit the deferral of the payment to the trust to be interest-free and to secure its payment by taking a charge over any property. Could the trustees accept an IOU from the surviving spouse to fund the legacy? Alternatively, could the trustees take a charge over the surviving spouse's financial assets? More than two years have passed since the death of the deceased.

read titleRead full title
Published on LexisPSL on 23/04/2021

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

  • The deceased's Will includes a nil rate band discretionary trust and authorises trustees to permit the deferral of the payment to the trust to be interest-free and to secure its payment by taking a charge over any property. Could the trustees accept an IOU from the surviving spouse to fund the legacy? Alternatively, could the trustees take a charge over the surviving spouse's financial assets? More than two years have passed since the death of the deceased.

The deceased's Will includes a nil rate band discretionary trust and authorises trustees to permit the deferral of the payment to the trust to be interest-free and to secure its payment by taking a charge over any property. Could the trustees accept an IOU from the surviving spouse to fund the legacy? Alternatively, could the trustees take a charge over the surviving spouse's financial assets? More than two years have passed since the death of the deceased.

A legacy to a nil rate band (NRB) discretionary trust is usually funded in the following ways:

  1. cash, property or assets owned by the testator are transferred to the trustees

  2. the trustees make a simple loan to the surviving spouse (unless the residue is settled on an immediate post-death interest (IPDI). This is often referred to as a debt/loan scheme. This option is usually avoided, due to the possibility of the debt owed by the surviving spouse being non-deductible for inheritance tax on that spouse's death—see section 103 of Finance Act 1986 and Phizackerley v HMRC

  3. the deceased’s personal representatives (PRs) transfer real property in the estate to the surviving spouse who is entitled to the residue (or to the trustees who will hold the residue in an IPDI trust for the surviving spouse), subject to a charge which the PRs create in favour of the NRB trustees.

Related documents:

Popular documents