When it comes to working hard in life and accumulating a comfortable fortune, it’s reassuring to know that the money we leave behind us will support our children when we’re gone and from savvy investments to family heirlooms, these are all things that will help ensure they live a good life.
The average life expectancy continues to rise, it’s now not uncommon for many adults to marry a second or third time. Divorce in the over 60s alone has risen by a third in the past decade, with many older couples going on to find a new love – but where could that leave your children?
Most adult children will be delighted to see their parents get a second chance at happiness, but nonetheless, they may have concerns over their inheritance. And, when you’ve worked hard your entire life and invested in property or stocks and shares, safe in the knowledge that it would always be there to see them through the tough times, if you or your ex-spouse are the ones who are re-marrying, then you might, too.
Writing a will is crucial to ensure that your estate is split as you would want it to be, so don’t let it be one of those things you are forever putting off for another day. If you are keen to ensure that your children inherit both yours and their other parent’s assets at some point in the future, then there is no time like the present to put those plans in place.
Even if you have no plans to divorce or split at the moment, there is no telling what could happen in the future – so it always pays to be prepared.
Having said this, it is likely that you will want your partner to benefit from your wealth, too – and more often than not, husbands and wives will leave their fortunes to one another to allow them to benefit for the rest of their lives before being passed down to any offspring.
But what if your spouse should remarry after you are gone, or your children should become estranged from their remaining parent? How, in such a scenario, can you ensure that your children’s inheritance is protected long term?
Leaving your estate to your partner outright in the event of your passing may mean that there is a possibility your children may never receive anything. Should your spouse decide, at any point in the future, to disinherit them or cut them off, then you’ll have no control over what happens next. Even if the two of you have made ‘mirror’ wills, there is nothing to stop your partner from changing their mind in the future – even if it seems unlikely now.
If your partner does not have a will or later remarries and does not draw up a new one, their estate will be automatically distributed according to the intestacy rules. Under these, stepchildren are provided for, which means that children from a previous relationship may stand to lose out.
Add to this the fact that a new relationship could make your partner’s estate vulnerable to a claim from their new partner after their death, and things could easily turn out quite differently than you had hoped.
It’s wise to take legal advice to ensure you take the right approach to dividing your estate and protecting your children’s inheritance – check out Prime Lawyers or another leading law firm for the most reliable and up-to-date counsel.
Life interest or discretionary trust?
Having a life interest trust written into your will is one approach that can offer a solution. Doing so will ensure that your spouse is provided for for the rest of their lifetime, making them entitled to income from the assets held within it – however, capital will ultimately pass onto your children when your partner, too, passes on.
In some cases, your partner may require access to some of the capital within their lifetime, and powers can be given to trustees to allow for this at their discretion.
A more flexible alternative is a discretionary trust, which provides a greater range of options for trustees. In this case, the will must be supported with a letter containing your wishes as to how these might be used.
In both cases, jointly owned assets should be reviewed at the time a will is drawn up. A document to ‘sever’ the ownership of these may also need to be signed in some cases to ensure that both parties’ share of jointly owned property will pass into the trust, as opposed to going directly to one another.
Gifting your children
Of course, another option is to gift your children a fixed amount of money or some particular assets in the event of the first partner’s death – or, if they are under the age of eighteen, place it onto trust for them for later. Although this may incur inheritance tax consequences, it’s a sure-fire way to ensure that some of your estate goes directly to your children, and that they won’t have to wait to benefit.
The bottom line is, it pays to be prepared – so don’t leave anything to chance. By taking the necessary steps now to protect your children’s inheritance, no matter what the current situation happens to be, you can rest assured that they will be provided for long after you are gone.