More on estate planning processes and procedures

Tax and trusts

What all Paraplanners should know about estate planning

On 11th June, John Bunker joined us for a Howwow special on estate planning basics, focussing on the processes and procedures to be aware of. Plus we dipped into the special measures taken during COVID-19. John delivers legal and tax training, as well as consulting for Irwin Mitchell.

Replay, slides and a couple of questions we didn’t have time to get to

If you missed it or want to watch again, you can watch the replay here. You can also get a copy of John’s slides here.

There were two questions that we didn’t have time to get to on the show but John has taken a look at them and answered them here. We’ve copied and pasted the questions straight from the ‘Ask a question’ area of the Howwow. You can get full context by watching the replay.

Question 1

How is the residence nil rate band impacted where the main residence was owned as tenants in common 50:50 and the 50% paid out to sons, prior to RNRB. Widow has downsized to a property which is now worth less than her own RNRB. Is the deceased’s RNRB lost in this case?

Answer 1

Yes but this isn’t straightforward. There are some principles:

  • If a deceased spouse left half to the sons, or that was done from his estate, then the widow’s half share is in her estate and she has a potential NRB of her own plus possibly part TNRB to transfer if the half share of property is less than value of spouse’s NRB.
  • If downsized since July 2015, she can look at value of earlier half share of property, and claim a “downsizing addition” on top of the RNRB for the house she has.
  • If the spouse died pre RNRB, she can claim TRNRB and may have more than one RNRB if sufficient value in previous property.
  • RNRB will be lost if the value of her current property and any downsizing addition is less than the full RNRB available.

Question 2

Can you use a DoV to remove/change benefits which were to be paid to a minor, even if you are looking to give them a share of a house, as an alternative to another asset, to use a RNRB?

Answer 2

You cannot do a DoV to take away anything from a minor. If that minor is the right beneficiary e.g. child or grandchild, and has the right trust in the will (e.g. bare trust or 18-25 if a child) so closely inherits, it does have possibilities.

  • If child say has half estate and house worth £500K, their half = £250K and could use £175K RNRB. It doesn’t need a specific gift; it could be just a share of the estate.
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