Nil Rate Band Discretionary Trust not set up

[Slim Shady]

Can anyone help with with this query please?

My mother died in 2013 and her will provides for a nil rate band discretionary trust to be set up. The trust was neither disolved (if that is the correct term) within the required two year period, or set up. So there is no paperwork at all relating to the trust.

The reason the trust was not dealt with within the prescribed period is that my father suffered a massive stroke within a year of my mothers death, and I have no doubt whatsoever that had my father not suffered a stroke he would have dealt with the trust within the prescribed two year period, because it was not in his nature to neglect such matters.

After a period in hospital my father was trasferred to stroke rehab unit for six weeks and then the nursing home where he now lives. He has significant physical disabilities (he is paralysed down one side of his body and has to be hoisted in and out of a powered wheelchair and bed) and also reduced cognitive abilities. My father is considered by his new solicitor to have the necessary mental capacity to make decisions, e.g. regarding his new will (answering questions about sums of money to be left to grandchildren etc), but this is clearly not the same as having the ability to carry out detailed research and weigh up the pros and cons of a complex matter such as the trust, unaided, in his nursing home.

If advantageous, is there any way that it can be claimed that the trust does not exist, either due to lack of action to set it up, or due to my fathers significant ill heath?

I have read that if my mothers share, or part of her share of the house (it was owned as tenants in common) passed into the trust, then her residence nil rate band will be lost.

Thank you!

[AGoodman]

No, I'm afraid there is no way to just ignore the trust. It will remain to be dealt with at some stage.

It will use up your mother's nil rate band but at the same time will prevent the assets within it from passing into your father's taxable estate - so you will still take the benefit from it.

These are not straightforward and a lot depends on the terms and actual assets so it would be sensible to take proper advice. The scenario you describe is not uncommon, although often the executors do not have the explanation you have set out.