The Daily Observer London Desk: Reporter- Victoria Smith
Our estate comprises a house worth £800,000 to £1million, plus approximately £300,000 in Premium Bonds and cash.
Our daughter has a controlling husband who has eyes set on her inheritance. We want to ringfence her share, whilst allowing our two sons immediate access to theirs.
In order to minimise inheritance tax we want to take advantage of the residential nil rate band.
We have been told that this is possible if we set up a trust, and the boys opt out of it within two years.
Inheritance plan: We want to ringfence our daughter’s share of our home and savings, but allow our sons immediate access to their shares
Our understanding is that all beneficiaries would need to opt out as the trust precludes take-up of the additional allowance.
However, our solicitor says our daughter’s inheritance can stay in the trust and this will not affect the residential allowance.
We would be most grateful for your opinion on this matter.
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Heather Rogers replies: It is understandable that you wish to protect your daughter and her inheritance in these circumstances.
Your solicitor is broadly correct regarding how a trust would work, as I will explain below.
Before you act, however, it is preferable and important to talk to your daughter if you haven’t done so already.
I say that with the caveat that you and she are able to speak safely, about which you must exercise careful judgement, of course.
But the reason I believe it is better to have a discussion with her first is that although you want to protect her, allowing your sons to realise their shares of your estate but not your daughter might cause a bigger problem than it solves.
