A Non-Profit Making Self-Regulatory Organisation Whose Primary Objectives Are
The Advancement, Education and Ethical Standards Within The Will Writing Profession

Welcome to the Society of Will Writers web site.

Following the recent budget and the announcement on October 9 that married couples and those in Civil Partnerships could use the ‘unused’ portion of their deceased spouse or civil partners nil rate band on their death to mitigate inheritance tax; many people have followed the advice given by the media either not to use a Will Trust to save IHT or to re-write their Wills removing them if they had Wills that used discretionary trusts.

One thing is clear, the nil rate band for 2008/2009 has risen to £312,000 per person and not, as was first reported, doubled for married couples and civil partners.

So why use a Will Trust?

Firstly, what has not been explained properly is that, although this new tax strategy might help couples who have done no planning as far as tax is concerned either during their lifetime or via a Will, dying will be far more complicated and very much more expensive.

Take a case where a husband dies and his widow lives for a further ten years. She dies and her Will, as did her husbands, takes no account of inheritance tax. Her executors now have to look back to see what her husband did not use on his death ten years ago and a further seven years before that to ensure that no gifts were made by him during the immediate seven years prior to his death. The Form 216 needs to be completed, and HMRC are unlikely to accept simply a statement that no gifts were made during that period, and that his nil rate band, prevailing at the time of his death was not used either, as gifts to the children or into a trust. They will have to be able to prove the fact.

The problem is compounded by the fact that the one person who could have helped them, his wife, is now also dead; so they are on their own and left with the onerous task of trawling through years of statements and other paperwork.

Is there a solution?

Yes, we think there is. More planning has to be done whilst at least one party to the marriage or civil partnership is still alive and careful consideration has to be given to making a Will and still using NRB discretionary trusts within the Will as the main vehicle for mitigating inheritance tax.

There is an argument that by using a NRB trust within the Will, the survivor’s estate could lose some of the NRB allowance and the NRB will rise by around 3% each year. We know that by 2010 the figure per person will be £350,000 (£700,000 per couple) whilst under this government, and so there could be a loss to IHT on the difference (the rate today is £312,000 a difference of £38,000) a loss of possibly £16,000, but the trust would have been earning interest hopefully at a rate greater than 3% so these loses should be minimal and counteract each other.

What do I do now?

Firstly you can contact the Society of Will Writers and get advice or you can visit the web site of the SWW Trust Corporation at www.swwtrust.co.uk  The Trust has put together a package where we can  introduce you to a fully trained consultant who can take details now of any earlier deaths whilst the information still exists. This can then be filed away for use in the future by your executors and family to support a claim to HMRC for any unused nil rate band.