The Lemon Fool

To take advantage of the £175,000 main residence band allowance, I need to leave my house to my children.
In my Will, must I be specific - "I give my house to my children" - or is it sufficient for the house to be passed on to them in the residue, assuming that there are sufficient other assets to satisfy any other specific bequests?

You don't actually need to still own a property to take advantage of the RNRB, providing you owned the property on or after 8 July 2015 when it was introduced.

https://www.google.com/search?q=do+i+ne ... ge+of+rnrb

https://www.skerritts.co.uk/529/blog/al ... -rate-band

Mum was selling her flat as she'd gone into a care home. As it happened she didn't live ling enough for it to sell, but had it sold AFAIAA the RNB would still have applied.

Paul

stewamax wrote:To take advantage of the £175,000 main residence band allowance, I need to leave my house to my children.
In my Will, must I be specific - "I give my house to my children" - or is it sufficient for the house to be passed on to them in the residue, assuming that there are sufficient other assets to satisfy any other specific bequests?

I took advice from my solicitor as to the exact wording but I do not think that the legacy has to be as specific as you are suggesting. I would suggest that you do the same.

Dod

Dod101 wrote:

stewamax wrote:To take advantage of the £175,000 main residence band allowance, I need to leave my house to my children.
In my Will, must I be specific - "I give my house to my children" - or is it sufficient for the house to be passed on to them in the residue, assuming that there are sufficient other assets to satisfy any other specific bequests?

I took advice from my solicitor as to the exact wording but I do not think that the legacy has to be as specific as you are suggesting. I would suggest that you do the same.

There are a few other gotchas. The equity in the property has to be £175,000 or more, or else the allowance is reduced.

And if your estate is above a certain amount (£2,000,000?) then it gets disallowed.

They should have just given every individual a £500,000 NRB and be done with it.

Lootman wrote:

Dod101 wrote:I took advice from my solicitor as to the exact wording but I do not think that the legacy has to be as specific as you are suggesting. I would suggest that you do the same.

There are a few other gotchas. The equity in the property has to be £175,000 or more, or else the allowance is reduced.

And if your estate is above a certain amount (£2,000,000?) then it gets disallowed.

They should have just given every individual a £500,000 NRB and be done with it.

Yes it is in fact just another complication in our complex tax system. Not sure what the Housing NRB is supposed to achieve anyway.

Dod

Why take a risk if you know to whom you wish an asset to go to?

Dod101 wrote:

Lootman wrote:
They should have just given every individual a £500,000 NRB and be done with it.

Yes it is in fact just another complication in our complex tax system. Not sure what the Housing NRB is supposed to achieve anyway.

Dod

It is an odd one - seems to penalise childless people - whether by choice or circumstance. I half expected some Fertility organisation to lodge a Discrimination case when it was announced.

Paul

DrFfybes wrote:It is an odd one - seems to penalise childless people - whether by choice or circumstance. I half expected some Fertility organisation to lodge a Discrimination case when it was announced.

I guess the nil gain nil loss inter-spouse transfer is even more discriminatory against the unmarried/unpartnered.
But since when has taxation been fair...

Dod101 wrote:Yes it is in fact just another complication in our complex tax system. Not sure what the Housing NRB is supposed to achieve anyway.

Dod

Like so much in our system, it's all about house prices. It takes away a dampening effect without at the same time privileging other assets. 'Cos those are held by "rich investors" - including people who may not be rich enough to own a house.

DrFfybes wrote:It is an odd one - seems to penalise childless people - whether by choice or circumstance. I half expected some Fertility organisation to lodge a Discrimination case when it was announced.

Fertility? I expect an adoption argument would kill off any such challenge.

Besides, it's the children whose votes are at risk when they are taxed.

UncleEbenezer wrote:

DrFfybes wrote:It is an odd one - seems to penalise childless people - whether by choice or circumstance. I half expected some Fertility organisation to lodge a Discrimination case when it was announced.

Fertility? I expect an adoption argument would kill off any such challenge.

I looked at that - the adoptee must be under 18, which restricts things slightly as you'd also need their parents' permission, and then be responsible for them.
Selecting a great neice who's parents had died and adopting them at age 55 to avoid IHT won't cut it,

DrFfybes wrote:

Dod101 wrote:
Yes it is in fact just another complication in our complex tax system. Not sure what the Housing NRB is supposed to achieve anyway.

Dod

It is an odd one - seems to penalise childless people - whether by choice or circumstance. I half expected some Fertility organisation to lodge a Discrimination case when it was announced.

Paul

I think it was not intended to penalise childless people (or rather their estate) as much as to benefit any direct descendants so that direct family did not lose out, or at least did not lose out quite as much as they might otherwise have. It is though fairly pointless and it would have been better, as someone has already said, just to have increased the Nil Rate Band for all to £500,000.

Dod

DrFfybes wrote:

UncleEbenezer wrote:

Fertility? I expect an adoption argument would kill off any such challenge.

Selecting a great neice who's parents had died and adopting them at age 55 to avoid IHT won't cut it,

When you're that age, fertility isn't an option anyway.

It might be discrimination in the case of a deceased whose child is dead making a bequest to grandchildren?

UncleEbenezer wrote:

DrFfybes wrote:Selecting a great neice who's parents had died and adopting them at age 55 to avoid IHT won't cut it,

When you're that age, fertility isn't an option anyway.

It might be discrimination in the case of a deceased whose child is dead making a bequest to grandchildren?

But a grandchild is surely a direct blood descendant so I would imagine would qualify.

Dod

DrFfybes wrote:

UncleEbenezer wrote:Fertility? I expect an adoption argument would kill off any such challenge.

I looked at that - the adoptee must be under 18, which restricts things slightly as you'd also need their parents' permission, and then be responsible for them.

Selecting a great niece who's parents had died and adopting them at age 55 to avoid IHT won't cut it,

It is legal to marry your great niece. So-called "avuncular marriages" were common amongst royal families.

So a simple solution (if you are unmarried yourself) is to marry your great niece.

stewamax wrote:To take advantage of the £175,000 main residence band allowance, I need to leave my house to my children.
In my Will, must I be specific - "I give my house to my children" - or is it sufficient for the house to be passed on to them in the residue, assuming that there are sufficient other assets to satisfy any other specific bequests?

No, you don't need to make a specific bequest of the house, and the RNRB will apply if the house (or its post 8 July 2015 sale proceeds) simply forms part of the estate.

Clitheroekid wrote:

stewamax wrote:To take advantage of the £175,000 main residence band allowance, I need to leave my house to my children.
In my Will, must I be specific - "I give my house to my children" - or is it sufficient for the house to be passed on to them in the residue, assuming that there are sufficient other assets to satisfy any other specific bequests?

No, you don't need to make a specific bequest of the house, and the RNRB will apply if the house (or its post 8 July 2015 sale proceeds) simply forms part of the estate.

This can get complicated! The RNRB only applies if the property (or post 8 July 2015 sale proceeds) is left to one or more descendants (children and grandchildren). Furthermore, the RNRB is the maximum of £175,000 or the amount the descendant(s) receive. I believe (I am sure Clitheroekid will correct me if I am wrong) that a property split between descendants and non-descendants can be directed by the executors to the descendants instead in order to maximise the RNRB, provided the non-descendants receive equivalent value assets to the amount of the property they do not receive (ie they do not lose out).

I have a relative whose will was drawn up by solicitors before RNRB was introduced. After some fixed cash legacies, the rest of the estate is left to a trust. The text says that this trust is to "divide into two moieties", one for the benefit of child 1 (or spouse if child 1 is dead) and one for the benefit of child 2 (or their children if child 2 is dead).

Does the trust structure affect the ability to use RNRB, if everything in the trust is paid to the children and/or grandchildren? How about widows of children?

This does make me realise a thing about getting solicitors to prepare a will: if the text of the will contains non-obvious legal stuff, ask the solicitors for an explanation in layman's terms and keep that for as long as the will is valid.

yyuryyub wrote:Does the trust structure affect the ability to use RNRB, if everything in the trust is paid to the children and/or grandchildren? How about widows of children?

Depends on the trust. If it is discretionary, then the RNRB is not available. It is possible to get RNRB where a trust is used. If it was me, I'd get the will/trust reviewed.