Beware of 2008 will changes, says expert

Advisers should ensure their clients review old wills containing nil-rate-band discretionary trusts, so that their clients can avoid “unseemly spats in court”, John Conlan, partner for Baker Tilly, has warned.

He said: “Old wills containing nil-rate-band discretionary trusts should be reviewed before deaths occur, and new ones should be written in terms that ensure the transferable nil-rate-band is taken into account.”

Mr Conlan was referring to two cases where investors had written wills before 2007, one which had named the Woodland Trust as beneficiary and another that named a spouse as beneficiary.

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In the case of the Woodland Trust, the will was not reviewed to take account of the Transferable nil rate band, which was introduced in 2008.

Mr Conlan said: “In the case of the married couple, both previously widowed, the husband died and his will settled the whole of his estate in two Trusts – one a NRB discretionary trust, and the other a life interest trust – both intended primarily for the benefit of his wife.

“However, the NRB discretionary trust takes no account of the transferable NRB from his late first wife, with the result that the life interest trust – which will fall to be taxed when his second wife dies – is larger than need be by £325,000.

“To make matters worse, the will in question was written after 2007, and so the problem was easily avoidable with proper drafting.”

Adviser view

Andrew Swallow, chartered financial planner for London-based Swallow Financial Planning, said: “I attended a three-hour update from Step on the Inheritance and Trustees Powers Act 2014. There were some fascinating insights into some of the pitfalls when dealing with estates, although such minutiae are somewhat wasted on those without wills.

“Will Aid is only really suitable for basic wills, due to the very low level of donation required, but you can do some good and write a will at the same time.”