What is a NRB Discretionary Trust?
You direct an amount equal to the NRB into Trust to your children or another person or persons. The idea is to utilise both the husband and wife’s NRBs. The Trust operates on the death of the first spouse. Under the old rules if the first spouse left everything to the surviving spouse this would result in no IHT being payable on the first death. It may, however, just simply postpone payment of IHT until the occasion of the second death. An alternative would be to leave the NRB outright to your children in your Will. This may cause problems if the surviving spouse is not adequately provided for. If you created a discretionary trust under a Will the surviving spouse is still capable of benefiting from the Trust but Trust assets do not form part of their estate. Before the legislation change on transfers of NRBs between spouses and civil partners these trusts were very popular and were included in a great number of Wills. Due to the legislation change they will quite often be counterprodu
