Nil rate band Will trusts are no longer tax efficient – is it time to update your Will?

Nil rate band trusts created by the Will of the first spouse to die are very common and were excellent tax planning options. This is because if everything passed to the surviving spouse on death the nil rate band of the first to die (usually £325,000 tax free) would be wasted.

However, since the introduction of the residence nil rate band (up to £175,000) and the transferable nil rate band and residence nil rate bands (i.e. you can now pass unused nil rate bands to the surviving spouse) the nil rate band trusts created under the Will are now, in many cases, less tax efficient, rather than more.

If you have a nil rate band trust in your Will and would like to discuss whether this is tax efficient or if you could make changes to make the position more so, please contact Gemma Hedges on 023 8046 1259.