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Aston Lawyer
Aston Lawyer, Solicitor
Category: Law
Satisfied Customers: 10780
Experience:  Solicitor LLB (Hons) 23 years of experience in Conveyancing and Property Law
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We had set up a Discretionary Trust to enable the spouse who

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We had set up a Discretionary Trust to enable the spouse who died first to make use of their INHERITANCE TAX ALLOWANCE. My husband died in February 2006 and when I came to remake my will recently I was told the Law changed in 2007 and the allowance might not now be applicable. Please advise. Regards, ***** *****

Hi Rosemary, you are correct in that the current law states that a husband and wife have a joint tax free Estate of £650.000, so the common discretionary trusts put in place previously are no longer a requirement to enable this tax fee amount t be fully utilised (in simple terms, the first £650,000 of yours and your late Husband's Estate is not taxable, and only any sums left by you exceeding this amount is taxable at 40%). So, although there is nothing you can do to amend your late Husband's Will, the Trustees could decide to distribute any monies held in the trust to you now. It would be wise for you to discuss matters with a local Wills Solicitor if you have any concerns or queries concerning what the best thing to do would be. I hope this assists and sets out the legal position. Kind Regards Al

Customer: replied 1 year ago.
You have answered my query most satisfactorily. will that figure of £650,000 be increased annually?

Hi Rosemary, thanks. No, the tax free amount of £650,000 won't increase, unless they decide to increase it in the Budget! Kind Regards Al

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Customer: replied 1 year ago.
Do I need to wind up the Discretionary Trust or did the New Law overtake all previous arrangements with regard to Inheritance tax?
Customer: replied 1 year ago.
the above question again: Do I need to wind up the Discretionary Trust of did the new law overtake all previous arrangements with regards ***** ***** tax?