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Weapon of choice

Regardless of how obsolete they may seem, discretionary will trusts remain an important tool in the financial planner's toolkit

7 December 2015

Discretionary will trusts (DWT) have been part of the estate planning landscape for a long time. Historically, their key role has been to ensure that (for married couples) an unused nil rate band wasn't needlessly lost on the first death.

From 2007 however, the introduction of the transferrable nil rate band meant that any unused allowance wouldn't be lost, but would be 'inherited' by the survivor. Where, as often happens, everything is left to the spouse (which of course doesn't itself use up any of the allowance) the surviving spouse therefore enjoys a double allowance on their eventual death.

Since 2007, many solicitors have entirely dropped their recommendations for will trusts, and some have even advised their clients to rewrite their wills to remove them. The new main residence nil rate band will no doubt lessen interest in them further.

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