Relaxation in rules on nil-rate band
Various changes in the trusts and tax world seem to have led to a mistaken belief that the nil rate band has doubled since last October. This is not so.
The cause of the confusion is a relaxation in the rules relating to the nil-rate band (currently £312,000). If this allowance is not used on the death of the first spouse/civil partner, it may now be doubled on second death. As simple as it sounds, it may not be this straightforward in practice. Detailed advice may be needed to ensure that benefits are not lost.
For couples with tax planning wills involving the use of trusts, there is no urgent need to revise those arrangements. The change in the rules simply provides another option on the first death. The use of trusts in wills is still favoured because of the flexibility they can provide in uncertain and complex family situations.
Trusts can protect assets from third party claims and means-tested help, such as nursing home fees. They can also provide children and grandchildren with tax-efficient funds that are outside their own estates.
As always, if you need pragmatic legal advice, we’re here to help so please get in touch.