Don’t miss out – review your Will today

Main Residence Nil Rate Band In my earlier blog on this topic I looked at the mechanics of the changes which will take effect for deaths from April 2017. In this latest blog we look at the impact the changes may have on home owners and the subsequent need to review your Will in light of the forthcoming changes. A review of your Will is particularly important if you have previously implemented a nil rate band discretionary trust into your Will. This was a common form of tax planning for married couples prior to October 2007. Discretionary trusts have also continued to be used since 2007 for those who do not wish their children to have an outright gift, such as children in rocky relationships or those who may be difficult or unreliable, they are also often used for disabled beneficiaries. As gifts into a discretionary Trusts will not be a gift to a direct descendant the additional main residence nil rate band will not apply. The group of potential beneficiaries in a discretionary trust may include children, grandchildren and adopted children as required by the legislation to be eligible for the relief but as the group of beneficiaries only have the right to be considered by the Trustees the main residence nil rate band will not be available. Whilst it is currently possible for the discretionary trustees of such a trust to transform the trust up to two years after death into a different type of trust that would be eligible for the additional relief, such alternatives may not be available or advisable. If your estate is worth over £2.7 million then the relief will not be available due to the taper relief which applies to estates worth over £2 million. It may therefore be sensible to consider making lifetime gifts to reduce the value of your overall estate so that advantage can be taken of the new relief. The combined relief for a married couple will total £350,000.00 by tax year 2020/21 but this will only be fully available if the value of your house equals or exceeds this amount and you have other assets to utilise your nil rate band (currently £325,000.00). If your house has a value of less than £350,000 but your combined estate is over a million then you may wish to consider purchasing a bigger property in order to reduce your inheritance tax bill. For a chance to review your Will and discuss the relief in more detail please contact Lindsey Bohanna on lindsey.bohanna@coleyandtilley.co.uk