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  • Katherine Bullock

Keeping calm and carrying on – Basic wills are not all bad news

It is sometimes necessary to put in place a basic Will while a person takes time to think through a difficult tangle of personal, business, and financial matters. I’ve found this to be particularly true at present where the options to talk things through with family or professional advisers are limited. A stop gap solution can make a lot of sense. However, some people breathe a sigh of relief and leave things there, which may make things more difficult in the long run. However, a basic Will that includes a Nil Rate Band Discretionary Trust can sometimes provide unexpected advantages, reducing the IHT bill to much less than expected.

"The calculation in s.39A can give rise to unexpected results…"

The Inheritance Tax legislation is complex – not least in terms of how the tax is calculated. One such section is IHTA 1984 s.39A. This section requires business and agricultural relief that attaches to certain assets – such as unquoted shares or AIM listed shares in a trading company or farmland – to be spread across the whole of a person’s estate on death, unless those assets are given away in a specific gift to a specific person. Often care is taken to make sure that such assets are gifted in such a way that the relief is not wasted. But might that miss a trick that a basic Will inadvertently does not? The calculation in s.39A can give rise to unexpected results where there is a blend of business and non-business assets and no specific gift is made of the business assets - perhaps a gift of the nil rate band into trust and the residue to the surviving spouse. The standard clauses inserted into some basic Wills may result in the amount that can be given away tax free increasing significantly with the result that the IHT bill is much less than expected and the nil rate band multiplies.

It very much depends on each case and the words used, of course - but it does show that even a basic Will, if properly interpreted, can sometimes be good news!


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