The Nil Rate Band and Residence Nil Rate Band Discretionary Trust is a legal tool that can help individuals reduce the amount of inheritance tax they have to pay on their estates. The Nil Rate Band is a set amount of money that can be passed on tax-free, while the Residence Nil Rate Band is an additional allowance available only for estates that include a main residence.

By establishing a discretionary trust, individuals can pass on assets to a group of beneficiaries, such as their children or grandchildren, while maintaining control over the distribution of those assets. The assets in the trust are protected from inheritance tax, and the rate of tax that would be payable is reduced by the amount of the Nil Rate Band and Residence Nil Rate Band available.

This type of trust can be particularly beneficial for individuals who own a valuable property, as the Residence Nil Rate Band can help reduce the amount of tax payable on that property. It is important to note that there are specific rules and restrictions around the use of the Nil Rate Band and Residence Nil Rate Band, so it is advisable to seek professional legal advice to ensure that the trust is established correctly.

In conclusion, the Nil Rate Band and Residence Nil Rate Band Discretionary Trust can provide a useful way for individuals to reduce the amount of inheritance tax they have to pay on their estates, while still retaining control over the distribution of their assets.