Probate and Will, Trust & Estate Disputes

Thomson Snell & Passmore advise on setting up a Discretionary Trust

A client attended a meeting to write a Will and happened to mention that her mother had died less than two years ago.

The client had her own property worth £500,000 and had inherited her mother’s property, also worth £500,000. She was divorced with children and so only one nil rate band and one residence nil rate band would be available on her death meaning that she would be able to pass £500,000 to her children free of inheritance tax but the remaining £500,000 would be taxed. She could not afford to give away her mother’s property as she had retired and needed the rental income.

On SEN’s advice, she varied her inheritance from her mother into a Discretionary Trust. She was able to continue receiving the rental income but her mother’s property was removed from her estate for inheritance tax purposes, dramatically reducing the inheritance tax bill on her death.

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