{"id":695,"date":"2022-08-02T08:00:00","date_gmt":"2022-08-02T07:00:00","guid":{"rendered":"https:\/\/ctt-group.co.uk\/tax-trust\/?p=695"},"modified":"2024-01-23T13:00:41","modified_gmt":"2024-01-23T13:00:41","slug":"the-residence-nil-rate-band-and-the-flexible-family-trust-a-perfect-pairing","status":"publish","type":"post","link":"https:\/\/ctt-group.co.uk\/tax-trust\/the-residence-nil-rate-band-and-the-flexible-family-trust-a-perfect-pairing\/","title":{"rendered":"The Residence Nil Rate Band and The Flexible Family Trust \u2013 A Perfect Pairing"},"content":{"rendered":"<div class=\"standard-content container wp-block \">\n\t\t<div class=\"content\">\n\t\t\t<p>Advisors at CTT Group, like many professional estate planners, often help our clients to use discretionary trusts. However, this can interfere with applications for the Residence Nil Rate Band (RNRB).<\/p>\n<p>On its surface, the RNRB may seem like a simple extension to the Inheritance Tax Nil Rate Band but that\u2019s not the case. RNRB is not automatically received \u2013 it must be applied for \u2013 and there are limitations on when it\u2019s granted.<\/p>\n<p>Help your clients secure their RNRB claim whilst making the most of discretionary trusts with CTT\u2019s Flexible Family Trust.<\/p>\n<p>&nbsp;<\/p>\n<h2><strong>What is the Residence Nil Rate Band?<\/strong><\/h2>\n<p>The Residence Nil Rate Band (RNRB) is an enhanced Inheritance Tax (IHT) allowance of up to \u00a3175,000 (for the current tax year) for someone leaving their main residence to their children or grandchildren. This allowance is in addition to the Nil Rate Band (currently \u00a3325,000 in 2022).<\/p>\n<p>The RNRB is not automatic; instead, the individual\u2019s estate at their date of death must satisfy the conditions outlined in the Inheritance Tax Act 1984. Broadly speaking, a deceased individual\u2019s estate will qualify for the RNRB if it includes their home (or a share of it), which a direct descendant then inherits.<\/p>\n<p>&nbsp;<\/p>\n<h3><strong>The Problem with RNRB and Discretionary Trusts<\/strong><\/h3>\n<p>Very commonly, we will recommend a discretionary trust (or trusts) to receive an individual\u2019s estate following their death. This provides numerous benefits, including (but not limited to) asset protection and tax efficiency. However, a discretionary trust does not qualify as a <em>direct descendant<\/em>.<\/p>\n<p>Now, all is not lost if your client\u2019s existing planning passes their estate to a discretionary trust or trusts. Trustees have the flexibility to satisfy the requirements for an RNRB claim. They can take action under S.144 Inheritance Tax Act 1984 to make an appointment within two years of death (provided a will or other testamentary disposition settles the trust).<\/p>\n<p>However, what if the trustees do not know they can do this? What if they realise too late? This risk may, of course, be reduced simply by appointing a professional trustee. But we believe it\u2019s best not left to chance!<\/p>\n<p>&nbsp;<\/p>\n<h3><strong>CTT\u2019s Solution<\/strong><\/h3>\n<p>In our efforts to ensure our clients always receive the best advice and are not paying IHT unnecessarily, we have developed our discretionary trusts coordinated with the will. This means that our clients are not only provided with the benefits of a discretionary trust, but the drafting of the trust also provides for an RNRB claim in the event of the trustees not acting, therefore still enabling the clients to maximise their IHT allowances. This is all achieved in a single trust!<\/p>\n<p>So, how is it done? Our Flexible Family Trust achieves an RNRB claim by carving out the relevant share of the estate within the discretionary trust itself. This creates a default position within a specified period, making an Immediate Post Death Interest (IPDI) in favour of the client\u2019s direct descendants. (This is only if the trustees haven\u2019t made a specific appointment on IPDI before this time.)<\/p>\n<p>CTT has developed the Flexible Family Trust to pair perfectly with the RNRB, ensuring that your client\u2019s entire estate can utilise the many benefits discretionary trusts offer in the most tax-efficient way.<\/p>\n<p>For more information on our Flexible Family Trust then please <a href=\"https:\/\/ctt-group.co.uk\/contact\/\">get in touch.<\/a><\/p>\n<p>Our modified discretionary trust also applies to our other trusts written within the will, such as the Discretionary Trust of Residue and NRB\/RNRB Discretionary Trust.<\/p>\n\n\t<\/div>\n\t<div class=\"wrapper\">\n\t<\/div>\n\t<div class=\"inner-wrapper before-bg-color\">\n\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":7,"featured_media":696,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Residence Nil Rate Band and The Flexible Family Trust - CTT<\/title>\n<meta name=\"description\" content=\"Estate planners will help clients use directory trusts. However, this can interfere with applications for Residence Nil Rate Band. Learn more.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ctt-group.co.uk\/tax-trust\/the-residence-nil-rate-band-and-the-flexible-family-trust-a-perfect-pairing\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Residence Nil Rate Band and The Flexible Family Trust - CTT\" \/>\n<meta property=\"og:description\" content=\"Estate planners will help clients use directory trusts. However, this can interfere with applications for Residence Nil Rate Band. 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