People in this bracket are well placed to make full use of the new Residential Nil Rate Band, so long as the correct planning is put in place.
In effect, people in this category who own a residential home worth at least £175,000 (unmarried) or £350,000 (married couple) and who have children, should be in a position to pass their estate down to their direct descendants with no inheritance tax to pay.
There are however, a number of potential pitfalls to look out for as follows:
Some wills created historically contained what is known as a ‘nil rate band’ trust. The use of this type of trust has the potential to cause the Residential Nil Rate Band to be lost, as the transfer of the assets would be to the trust and not to direct descendants. It would be good practice to review you will for the presence of a nil rate band trust.
Your direct descendants (i.e children or grandchildren) will need to be the ones who inherit the residential home to qualify for the new relief. Does your current will meet these criteria?
We are running a series of free estate planning seminars where you can learn more about the new Residential Nil Rate Band and how to avoid some common mistakes.