Retaining Nil Rate band and how not to create a trust

[uglytwin]

My uncle recently passed away. In his will it states that a nil rate ban discretionary trust should be set up with the trust income (and any requests for capital) going to my aunt and then capital going to me on her death. The will was set up a month before the transferrable nil rate band rule was put in place but had not been changed.

My aunt and I agree that we should not bother about creating the trust and that all of my uncles asset should go to her. The joint estate is approximately £600,000 and so whilst we are keen to do this the main aim is to make sure we retain the nil rate band transfer upon my aunts death. i.e. we dont want to create a trust then advance all capital to my aunt meaning we would use up my uncles nil rate band.

We are at present completing forms for certificate of confirmation (doing this ourselves as we are very organised and have full details of all assets) but wondered what forms we have to complete to not create the trust in the first place whilst retaining the transfer of uncles nil rate band to my aunt upon her death?

Can anyone help?

We all reside in Scotland.

[Lee Young]

If you want to bring the trust to an end (and you should defintiely take advice before doing so) the trustees woould need to execute a deed of appointment to bring the trust formally to an end. Without doing that the Revenue would deem the trust to still be in existence and refuse the transferable nil rate band on the second death.

[maths]

Lee

Could not the life tenant and remainderman execute a DoV under which the property is simply transferred to the life tenant, thus avoiding the need for the trust to be created (with the usual back-dating effect) ?

IHTA 1984 not in point as the an IPDI appears to arise under the trust from date of death.

[maths]

should read IHTA 1984 s 144.

[Lee Young]

I think this all depends wherther it is an IPDI or a discretionary trust? Th OP describes it as both and I latched on to the discretionary element of it!

[maths]

Uglytwin. you need to let us know the precise nature of the trust
ie is it a life interest trust (which means aunt has right to income) or is it discretionary (which means trustees decide who gets income and capital) ?

If discretionary who are the class of beneficiaries?

[uglytwin]

Apologies for delay in replying.

It's a discretionary trust.

I'm the ultimate beneficiary - no one else.

So am I right in sayin that to end the trust I would have to acquire a solicitor and complete a deed of appointment and that preserves full transferable nil rate band?

[pqtaxation]

It's a discretionary trust.

So am I right in saying that to end the trust I would have to acquire a solicitor and complete a deed of appointment and that preserves full transferable nil rate band?

No, not you as a beneficiary.

My reading of Lee Young’s first response is that it is trustees who have to act (of which you might be one).

No matter how organised you and our aunt are, presuming you both are executors (and trustees?) of his will, I’d suggest it is unwise for the executors/trustees not to retain a solicitor (ideally your uncle’s who drafted his will if the relationship is still good) to review the inheritance tax account before submission and to prepare necessary deed(s).

[Lee Young]

It is for the trustees to do the deed of appointment. And I would agree with pqtaxation, that this should not be done until you have had the benefit of advice.

[uglytwin]

Having visited a solicitor they quoted an approximate cost of not more than £12,000 to do this.

Perhaps I'm slightly foolish but feel this is rather high?

Coudl anyone recommend a solicitor in Edinburgh that could help me? Or alternatively someone who is happy to work via emails/post etc?