INHERITANCE TAX AND “CARRY OVER” OF THE NIL RATE BAND
Have you taken or can you take advantage of the changes to the application of the Nil Rate Band in assessing the estates of deceased spouses and civil partners to inheritance tax.?
The Nil Rate Band (currently £325,000 for the tax year from 6th April 2010 to the 5th April 2011) is the value that can be given away on death free of inheritance tax. Each individual has one Nil Rate Band allowance on death.
However, in the case of married couples and civil partners, there is no inheritance tax charge in any event if the estate of the first to die is left to the surviving spouse or civil partner. Under the old rules, this meant that the Nil Rate Band of the first to die often went unused. To get round this problem, clients were advised to consider discretionary trust wills where the Nil Rate Band of the first spouse or civil partner to die was instead placed in trust.
Under the new rules, if the Nil Rate Band of the first deceased spouse or civil partner is unused, this can be carried over on death to the estate of the second.
If you have discretionary trust wills in place, you may be wondering whether or not you should change them to reflect the new legislation. Or, if you have lost a spouse and his or her will contained just such a discretionary trust, you may also be wondering if there is anything you can do to make use of the new legislation. The answer in each case will depend on your own personal circumstances and, if you would like to find our more about this, our probate specialists will be happy to help. Please contact Kathryn Tarry in the first instance.