Q&As

Would the residence nil rate band be available where a testator A leaves a residential property on successive life interest trusts (first to spouse B and then to child C) with remainder to a non-lineal descendant D absolutely?

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Published on LexisPSL on 22/03/2018

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

  • Would the residence nil rate band be available where a testator A leaves a residential property on successive life interest trusts (first to spouse B and then to child C) with remainder to a non-lineal descendant D absolutely?
  • Is the RNRB available on A’s death?
  • Is the RNRB available on B’s death?
  • Is the RNRB available on C’s death?

Would the residence nil rate band be available where a testator A leaves a residential property on successive life interest trusts (first to spouse B and then to child C) with remainder to a non-lineal descendant D absolutely?

In answering this Q&A, we have assumed that there is only one qualifying residential interest (QRI), that the value of the QRI exceeds the residence nil rate band (RNRB) threshold, that the relevant net estate does not exceed the taper threshold and that there is no need to consider the downsizing addition.

For an introduction to the RNRB, see Practice Note: IHT—residence nil rate band.

The RNRB is only available where a QRI is ‘closely inherited’ on the deceased’s death. It applies to deaths on or after 6 April 2017.

'Inherited' is defined as meaning that the property passes from a person who has died and the property formed part of their estate immediately before death. The disposition of the property may be effected by Will under the law relating to intestacy or 'otherwise', which would include the passing of joint property by survivorship, a QRI passing by a deed of variation with the application of section 142 of the Inheritance Tax Act 1984 (IHTA 1984) or an appropriate appointment of a QRI from a discretionary trust within two years of the death applying IHTA 1984, s 144.

'Closely inherited' is

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