Your Old Will Is It Still Going to work After April 2017?
Posted on 28th February 2017
If your Will has been in place for a number of years, you may find that after the April 2017 when the new Residence Nil Rate Band (RNRB) comes into effect, that your old Will is no longer inheritance tax efficient.
From the mid 1970's as a married couple having Wills in place they have been able to leave their whole estate to their surviving spouse without having to pay any inheritance tax, this would mean that the first of the deceased (as a married couple), their Nil Rate Band (NRB) allowance was left unused. What this actually meant was the first spouse to pass away, their allowance was in actual fact wasted, so came into play the Nil Rate Band Discretionary Trust that were placed into many Wills. This meant that the deceased spouse's estate up to the £325,000.00 (the current NRB) would be paid out into a Trust for the benefit of the beneficiaries of the Will, which would also normally include the spouse of the deceased. This way the surviving spouse would not unwittingly have her estate increased over her NRB threshold, this way if the whole of the married couples estate was a large estate, this would make sure that the Estate was inheritance tax efficient usually saving a huge amount on inheritance tax.
Further changes came in to play in 2008, thus making way for the any unused NRB to be passed to the second of a married couple to pass away to their estate. Husband passes away first leaving his estate to his wife tax free, when the wife passes away, she had her own NRB of £325,000.00 plus that of her husband whom had passed away before her so the wife's estate now had £625,000.00, thus there was no longer any need for the NRBDT, and those discretionary trusts could have been removed from existing Wills (that contain the NRBDT) as long ago as 2008.
As of April 2017, the new Residential Nil Rate Band (RNRB) comes into play for people who own property, if you have an old Will in place that contains a NRBDT, this is likely to be detrimental and make your Will non inheritance tax efficient. So From April 2017 if you have an old Will in place that contains a Nil Rate Band Discretionary Trust (NRBDT), you own property and you have children, it would be a really good idea to get your old Will reviewed. You may still need to have a Trust within your Will, as this can always help with Estate planning, and is always a good idea to get advice from a professional.
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