Patrick's in-depth knowledge of the subject, combined with his quiet, calm professional manner put our minds at rest - before our bodies! Dave Saunders
0117 907 1002
Willing to give peace of mind
When a couple have children from different relationships, matters can become quite complicated. Action must be taken to ensure that children and current partners are properly provided for.
This may seem daunting, but with good advice and appropriate use of trust provisions it is usually relatively easy to protect all the competing interests that arise.
A surviving partner may need to have the benefit of assets (such as home or savings) during the remainder of their life. Trust provisions can provide for this while still preserving the asset or its value for the ultimate benefit of children or grandchildren.
It may be appropriate to appoint your current partner as guardian to give them the right to make welfare decisions for them. This needs to be considered in light of any rights held by a surviving parent.
Assets will be held in trust until children are at least 18. Who would be most appropriate to appoint as trustees? Would it be a surviving parent, current partner, both of them, or others?
Henrietta is divorced and has two children from the marriage. There was a clean break settlement in the divorce. She owns the former matrimonial home and now lives there with her new partner Henry, who never married but has one child from a previous relationship. The couple are not married and have a further child of their own. Henry owns a property which is rented out. They have some savings, equally divided between them.
Their current assets are:
Because Henry and Henrietta are unmarried, when one dies the other has no automatic right to inherit the other’s estate. Since they have lived together for more than two years, a claim could be made under the Inheritance (Provision for Family and Dependents) Act of 1975, but this would involve an expensive Court action with no guarantee as to the decision.
They want all three older children and their youngest child to benefit from their individual assets, but it would cause problems for each of them if they simply give their individual assets to children on first death. However, they are concerned that if they make Wills leaving all assets to each other, the children of their earlier relationships could end up with nothing.
The solution is for each of them to create Wills leaving their individual assets in trust for the benefit of the surviving partner and for their individual children.
Henry’s Will places his own house and savings in trust for Henrietta during the remainder of her life, so that she can continue to receive the rental income and interest on the savings. On her death those assets will be divided between his two children. Henrietta’s Will makes similar provision for her house and savings, meaning that if she dies, Henry and the children can continue living in their home. Later, when Henry dies the value of the house and savings will be divided between her three children.
This solution also avoids Inheritance Tax. The value of the individual estates is below the threshold, so no tax is due when the first of them dies. If they had left all assets to each other, the value of the amalgamated estate would exceed the threshold and tax would then be due on the death of the second partner.
Westbury Wills is a member of the
Society of Will Writers