As so often, there’s probably no right answer. I am hugely appreciative of your various thoughts. Summarising:
1. TNRB. This seems at best difficult, requiring (Anthony) ‘argument’ or at worst (Lee Young) ‘impossible’. There seems no benefit to trying for a course of action that is potentially difficult.
2. Appointing the house to the surviving spouse would mean that Spouse 1’s NRB had never been used. (I mean ‘Used’ in a way that was beneficial to the family, for all that it had been used up for TNRB purposes.)
3. The trust was created at the date of death which is something over 10 years ago.
4. The only questions therefore are (a) what was put into the trust ; and (b) when did it go in. Here I suspect one of the following two will have happened.
Either, take the 225k as having gone in at the date of death, and accept the late filing penalty – which I think is 3k? – on the grounds that the value at the 10-year date was in excess of 80% of £325k, so there was a reporting obligation, but not in excess of 325k so no tax liability. That said, is there an obligation for a professional valuation at the ten year point? HMRC are scarcely likely to bring in the DV in order to dispute the £260k threshold just for the sake of a 3k penalty, are they?
Or take the 225k as going in now. And for this, what paperwork do you think we need? Just a declaration of bare trust by Spouse 2 regarding their interest in the relevant proportion of the house. Does this give rise to an SDLT liability as there is a transfer of real estate in settlement of a debt?
« Anthony « I am assuming that the tenancy had been severed as well
Please would you clafiry what you mean by this. (No, it was not a joint tenancy.) And on what basis would the trust and Spouse 2 own the property? Joint tenants? Tenants in common? In the event of a joint tenancy would the survivorship rules work to transfer it to the trust on death? Thus allowing it to be sold before probate to settle the IHT bill?
Thanks again.
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