Closing a NRB Discretionary Trust before 10 year anniversary

[Starlightone]

When my mother died in August 1996 her half share of the house was put into a NRB Discretionary Trust (of which I, my brother and a solicitor are trustees). Her will stated that on the death of my father then her half of the house should be equally distributed between the four children

My father has recently passed away and my brother and I want to comply with her wishes. However we are having problems with the solicitors company and are now doing my fathers probate ourselves even though we are having to deal with a large inheritance tax bill.

I really need advice (asap) on whether or not we have to have the solicitors draw up the Deed of Appointment appointing the half share of the property amongst the children or if there is a standard form/document we can draw up and just get the trustee (solicitor) to sign?

Any help on this matter would be much appreciated.

[Starlightone]

I should add that my father's will is not complicated and the Inland Revenue IHT department has been quite helpful so my real question is really

1) does the same solicitors firm (of whom one of the partners is a named Trustee) have to drawn up the Deed of Appointment to distribute the property amongst the beneficiaries or if there is no standard form/document I can obtain - can I use an independent solictor to draw up this for me?

thanks

[Lee Young]

The trustees are not obliged to use the trustee's firm to prepare the deed, but you will need the solicitor-trustee's agreement to the instructng of another firm. If he/she is obstructive, then request he/she retire from being trustee.

[Starlightone]

Lee, thanks for your quick reply.

I have some questions about the Discretionary Trust Fund as my mothers discretionary trust is coming up to its 10th anniversary (22/08/2006).

If the trustees distribute the 1/2 share of the house in equal shares to the four beneficiaries before 22/08/2006, when the house is sold (as it will have to be in order to meet the IHT for my father's estate) can the first £285,000 of the money be deducted from the sale price (as this would be the IHT threshold for my mother) and then IHT paid on the remainder?

The IHT Department have told me to fill in IHT100 and IHT100b as they say the Discretionary Trust closed on the death of my father.

It is not clear to me whether or not the beneficiaries would lose the NRB if the 1/2 share is transferred to the beneficiaries before the 10 year anniversary.

Is this something that I should really talk to a solicitor about?

[Lee Young]

The answer to your last question is defintely yes.

If the trust came to an end when father died, as you suggest in your original posting (I would need to see the paperwork to determine this for sure) and if the value of mother's trust's half of the property is less than the nil rate band then there should be no IHT to pay in the trust. You will then have a full nil rate band to apply against mother's estate.