Does your will need reviewing in light of the new Inheritance Tax Residence Nil Rate Band?

In less than a month, the government's new Inheritance Tax Residence Nil Rate Band will come into force.Hailed by some commentators as a welcome form of relief from death duties, the New Residence Nil Rate band works as a 'top-up' to the usual £325,000 basic nil rate band, starting at £100,000 in 2017/18 and rising by an additional £25,000 each year.This means that by 2020, a couple could pass on an estate worth £1 million tax-free to a direct descendant.However, our specialist wills solicitors warn that strict criteria mean that not everyone is set to benefit and millions could miss out on this latest inheritance tax perk unless they review their will.Winners and losers under the new Residence Nil Rate BandDirect descendantsThe wording here is key, only 'direct descendants' such as legitimate children, stepchildren, adopted children and grandchildren are eligible to benefit under the allowance.No other relative is entitled to the inheritance relief, even if there are no direct descendantsProperties in discretionary trustProperties held in discretionary trusts are excluded from the scheme, even when the beneficiaries listed are direct descendants.The reasoning behind this is as follows: any assets in trust are not directly owned by the beneficiaries but remain under the control of the trust and trustees.Rebecca Purtill of Farnworth Rose Solicitors comments: 'Discretionary trusts were incredibly popular given the flexibility that they offer. However, the introduction of the new Inheritance Tax Residence Nil Rate Band could leave many financially worse off, missing out on transferring at least £100,000 tax-free.'For this reason, I would urge anyone who has a discretionary trust to seek further legal advice.'Properties used solely for businessTo qualify for the new inheritance tax relief, the property being passed on must have been your main residence at some point. This means that business properties will be excluded as will buy-to-let properties that were never your main home.Properties worth over £2 millionA cap has also been introduced, affecting estates worth £2 million or over. The government has set a sliding scale, where for every £2 over the £2 million estate cap, the Residence Nil Rate Band will be reduced by £1.This effectively means that any estate worth over £2.35 million (or £2.7 million with a surviving spouse) will not qualify for the new Residence Nil Rate Band and downsizing your estate may make the most financial sense.Get the advice you need, todayTo find out how the new Residence Nil Rate Band could affect you, get in touch with the dedicated future planning experts at Farnworth Rose Solicitors.Our experienced will writing lawyers are here to help you and can explain all options available to you in plain, concise terms.For further information, simply call 01282 695400.Or, if you would prefer a callback, fill in our quick online contact form and we'll be in touch.