Inheritance Tax (IHT) RNRB allowance and your existing Trust: ensure you’re not excluded from the RNRB Inheritance Tax (IHT) allowance if you have placed your assets in a Trust.

When you decided to place your assets into a Trust on your death it was to keep them safe from care fees or loss of assets on the survivor’s remarriage. This is because the assets in a Trust will never become part of the survivor’s estate.

Now we have the new RNRB Inheritance Tax (IHT) allowance (see How does the RNRB save you Inheritance Tax (IHT)) , homes held in certain types of Trust cannot benefit from the RNRB allowance.

The HMRC Inheritance Tax (IHT): how to apply the residence nil rate band guidance gives this information;

Trusts

A home, or a share of one could be either:

• held in a trust before a person dies
• transferred to a trust when they die

The availability of the RNRB will depend on the type of trust.

This is because the type of trust will affect whether HMRC treats:

• the home as part of a person’s estate for Inheritance Tax purposes
• that person’s direct descendants as inheriting the home

The guidance further states;

If a home is held in a trust or transferred to a trust when a person dies, the availability of the additional thereshold [i.e. the residence nil rate band] will depend on the type of trust. This is because the type of trust will affect whether HM Revenue and Customs (HMRC) treat:

• the home as part of a person’s estate
• that person’s direct descendants as inheriting the home

When a home is held in a trust or transferred to a trust, you should discuss how the additional threshold applies with a solicitor or other professional adviser who knows about trust law.

We strongly suggest that if you have put your property into a Trust either in your lifetime or in your will to protect your assets, you seek help from an advisor to discuss your options so you do not miss out on the RNRB allowance.

If you would like more information, or would like to discuss with one of our expert Consultants how to ensure you’re not excluded from the RNRB Inheritance Tax (IHT) allowance if you have placed your assets in a Trust, please contact us. Our advice is completely free of charge (we apply a fee only if you proceed with the agreement to prepare the necessary legal documents for you.)

Call us on 020 8568 9602 or email enquiries@willpowergroup.com we would be delighted to hear from you.