My spouse and I own a £1m property as tenants in common (50% each). We have no other assets.
On the death of one, the share will be put into a discretionary trust, which will be managed by our two children. What tax is liable if the surviving partner continues to live in the property? What are the tax implications on the trust?
Arthur Weller replies:
Instead of a regular discretionary trust, perhaps you are better off with an immediate post-death interest (IPDI) for inheritance tax purposes. This will enable the surviving spouse to continue to live in the house and will have the advantage of enabling the surviving spouse to 'inherit' the nil-rate bands of the first spouse to die.