Keen to limit Inheritance Tax and not sure how your estate will be managed once you’re gone?
An answer here might be a Discretionary Nil Rate Trust. It’s easy with Wills 4 Less We steer you through the maze of information and give straight-forward advice - not jargon planning that will make sure your family will be looked after when you are no longer there.
It’s not always easy to think about the future, but making sure you have a plan for ensuring your loved ones are protected from inheritance tax (IHT) can offer peace of mind. One frequently asked question we are asked is: “Should I establish a discretionary nil rate band trust in my will”? It’s a genuine concern and one that can seem daunting at first. Which is why we’re here to walk you through everything you need to know about the discretionary nil rate trust what it is, how it works, and whether or not it’s the best decision for you and your loved ones. For more detailed information, visit https://maidenhead.wills4less.co.uk/nil-rate-trust/
What is a discretionary nil rate trust?
Put simply, here is what it means: a discretionary nil rate band trust is one you create to utilise the nrb for Inheritance Tax. It also enables you to put assets into the trust and these become potentially exempt transfers (PETs). Normally the assets are held into trust for a minimum of seven years which effectively means that you have reduced IHT on your estate. Let’s break down what sets it apart:
Discretionary: You don’t have to itemize who gets what. The trustees determine when and how the trust’s beneficiaries grandchildren or perhaps your children receive distributions.
Nil Rate: It is based on your inheritance tax-free threshold (now £325,000 each).
Trust: You put assets into a legal structure controlled by trustees until such time as the trustees dole them out.
Not everyone requires a discretionary nil rate band trust but for some people it can be incredibly beneficial. You may want to consider one if:
You have an estate that is close to or above the IHT threshold
You have kids from a previous relationship
You want to provide for young or disabled beneficiaries
You’re worried that your spouse might remarry, or you worry they’ll make other decisionsÉ after your death
You would like to protect a proportion of your estate from care home fees
In other words, a discretionary nil rate trust can protect your estate come what may by carving future family life into smaller (and more easily manageable) chunks.
“How can I ensure my kids don’t get shortchanged by care costs or the danger of a spouse remarrying?”
A Discretionary Nil Rate Trust First of all, the question: “Will a nil rate discretionary trust protect my property for my kids?
It WAS the ‘Best tool in the box’ But now it’s just another ‘Trust’ Sort of!
Inheritance Tax Saving - monies in a Discretionary Nil Rate Band Trust will invoke your nil rate band without adding to the estate of your spouse thereby saving for more for children long term.
Flexibility - Trustees can dole out assets as they see fit, based on changing beneficiary needs.
Protection Against Remarriage Risk - in the event your spouse were to remarry, trust assets are not technically their property and cannot be passed on other than to the bloodline you desire.
Protection from Care Fees - though not guaranteed protection, the trust can impoverish that part of your estate which could have been taken into consideration when being financial assessed for care.
Control - you have the ability to make sure funds are managed responsibly as opposed to just handing over a lump sum.
Ideal candidates include:
Private household spaces in dwellings with adults not living as the spouse/civil partner of the household reference person.
People with valuable estates who want to limit exposure to Inheritance Tax.
Parents or grandparents who want to give for children/grandchildren, but also seek flexibility to adapt to change.
Those worried about what could happen to the money - if their beneficiaries go through financial or marital problems - this trust keeps the assets held until such time as a trustee thinks them ready.
Anyone who wants a more organized and tactical estate plan while you are alive, instead of leaving everything up to the post-mortem probate process
Should I use a discretionary nil rate trust rather than life interest trust?
Each has different uses. A life interest trust bestows a fixed income or right to live for spouse, whereas a discretionary nil rate trust offers greater footing for more recipients
Will a discretionary nil rate band trust save care home fees?
In some cases it might lower exposure to care home fees, however local authority deprivation of assets rules are complicated. We give clear advice on this in your consultation.
Will it complicate probate?
There may be a little bit of delay or an increased complication, but still, with professional guidance (again like from Will 4 Less) it can be dealt with swiftly. The tax benefits over the long run overpower the administrative hassle in the short term.
Can I change my mind later?
Yes that’s because the trust is spelled out in a will, which you can modify or revoke so long as you are mentally competent.
My spouse helped them and they now want to know if my husband can get some money from the discretionary nil rate trust.
Yes. Payments can be made to your spouse if needed by the Trustees, which means that flexibility is maintained yet you protect the funds within his/her estate from Inheritance Tax.
We know this isn't all about tax savings. It's about taking care of your loved ones and leaving them in a safe place. At Will 4 less we are relied upon by thousands of families as :
We translate complicated terms for humans in an easy-to-understand way.
Our charges are straightforward, with no surprises.
You receive professional will writers who genuinely care about your peace of mind.
No two discretionary nil rate trusts are the same and we will personalise each trust to suit your family.
We offer continuing assistance if your needs shift.
Thats why here at Will4Less, we want to help guide you through every detail. From understanding how the discretionary nil rate trust will use your nil rate band, to appointing trustees, and the ongoing decision-making process- we have you sussed.
Do yourself and your family a favor,” take the next step. Get in touch for a no-obligation discussion today, and find out how we’d work your nil rate trust.
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