By Deed of Variation in 1999 most of my late father's assets were put into a discretionary trust (half share of house worth around £110k at the time and £100k of investments, marginally under the £215k limit applicable at the time of his death in 1998) with my mother and other family members the beneficiaries. At the time this was considered to be an effective way of avoiding inheritance tax on my mother’s death. It was also seen as a way of skipping a generation if desired. There has been a distribution to one beneficiary of around £50k.
My mother’s still around (good news of course!) and her estate is worth about £325k. However given the nil rate band transfer between spouses now available I was wondering whether the trust is still the right thing to have, as it is a bit of a hassle in some ways and income is taxed at the higher trust rate. Of course it may be irreversible anyway.
I have a second albeit linked point. My mother is in line to inherit around £50k which would as things stand take her over the IHT limit. Are there any straightforward ways to avoid this?
Grateful for any comments.
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