Wills Bristol - Will Writing in Bristol has become a more involved process since the surge in property prices over the last few years. Many will now find themselves over the personal allowance for Inheritance tax and a well drafted Will with a Trust element can protect property and the future for loved ones.
Inheritance tax has become a concern for more and more estates in Bristol since freezing of the IHT personal allowance threshold (currently £325,000) in 2010. Married couple do benefit from the automatic doubling up of the personal allowance threshold and so up to £650,000 can be passed to children etc without any IHT being payable.
There are all manner of Will Trusts claiming to reduce IHT for an estate over the personal allowance threshold. Unfortunately many may find that by the time the Will Trust is acted upon such schemes have become redundant, new law has been implemented or a more suitable form of tax planning is available. Because of these reasons many clients feel the 2 year Discretionary Trust provides the best option for the future. If there is no immediate IHT or other saving to be had the Executors can simply pass the estate directly to the surviving spouse/partner.
It is important that any appointment must be made within two years or the new Inheritance tax allowance for the main residence (RNRB) is lost. This new allowance gives an additional personal allowance, £175,000 by 2020/21 but only in relation to the main residence, so for example by 2020/21 a married couple can gift a £1 million main residence free of IHT to their children or grandchildren. The law requires for the appointment, i.e. gift of the residence, to be made to direct descendants. Assets held in a discretionary trust would not automatically fall into this category and this is why our discretionary trusts are limited to 2 years. If the gift of the property is made within 2 years the allowance would apply and the saving made.
The Trusts also allow for the first personal allowance to be used on the first death if necessary. For example, assets could be given to children if it was felt that the likely increase in the IHT personal allowance may not keep pace with the value of any assets, such as property. Further IHT savings could also be secured by making loans to the surviving spouse/partner if and when funds are needed, creating debts and so reducing the taxable estate of the survivor on his/her subsequent death.
These Trusts also provide protection against the local authority with regards to care home fees. The share of the estate of the first spouse/partner to pass away would be held in Trust and could not be accessed by the local authority if the surviving spouse/partner were to require care.
Please contact the consultant helping with your enquiry directly if you have any questions concerning this factsheet, or call Rose & Trust of Bristol on 0117 369 1969.