Will and Trust Wording Check

Will and Trust Wording Check

Will and Will trust wording need to be checked to ensure that your wording is sufficient to take account of future tax threshold changes.

Some people will have Wills that include some type of Discretionary Will trust (DWT) designed to utilise the nil rate band on the first death.  

However, the amount that is placed within the Discretionary Will Trust DWT will be dependant on the wording used, particularly now that it is possible for nil rate bands to be transferred.  For example, a widow who has remarried, whose previous husband used none of his nil rate band.  If the widow subsequently dies, her Will might refer to “an amount equal to the inheritance tax nil rate band applicable at the time of my death, less any chargeable transfers (including failed potentially exempt transfers) made by me within 7 years of my death” to be placed in the Discretionary Will Trusts DWT.

If she dies now, in the tax year 2007/08, the nil rate band would have been £300,000.00, even though she now has the ability to double her nil rate band.  Had the wording been along the lines of “the maximum amount that could be transferred if it were to be wholly chargeable to inheritance tax at the rate of nil per cent”, up to £600,000.00 could be placed into the Discretionary Will Trust DWT.  Perhaps now is the time for clients to review the wording in their Wills.

Useful links:

Learn more about Discretionary Will Trust DWT and related topics in the Inheritance Adviser Channel 

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