The importance of having up to date Wills in place should not be underestimated, especially if you are part of a blended family. By this, we mean a family where one or both parents have children from previous relationships.
Many couples would like their Wills to be straightforward, usually leaving their estate to each other and then on to all the children on second death. However this can have unforeseen consequences if you are part of a blended family, and can mean that intended beneficiaries end up missing out.
Example 1
Mr and Mrs Smith have Wills leaving everything to each other and then on second death to be equally divided between Mr Smith’s 2 children and Mrs Smith’s daughter. Mr Smith dies first and his estate passes to his wife. Over time though, Mrs Smith loses contact with her step-children, or there might have been a falling out. She later changes her Will to leave what is now the entire combined estate to her daughter. Mr Smith’s children are left nothing.
Example 2
Mr and Mrs Smith have moved into Mr Smith’s house. Mrs Smith sold her property to pay for living expenses, holidays etc. Mr Smith has a Will leaving his estate to his children, Mrs Smith leaves her estate to hers. However as Mr Smith’s estate includes the house, on his death this passes to his children, who ask Mrs Smith to leave. She has to take legal action to try and stay there.
In order to protect the survivor of the couple and to make sure that assets eventually pass down to children, a trust is a useful tool. There are different types of trust and what will be appropriate will depend on your circumstances. People have an inclination to avoid trusts because of perceived complexities, however if you want to exercise control over assets in your estate across generations, a trust can often be the right solution and also provide flexibility.
Cohabiting couples
The examples above assume that Mr Smith and Mrs Smith are married, but they may not be. It is even more important to consider what happens on the death of one partner where they are not married, since if there is no Will, an unmarried partner has no automatic rights of inheritance under the Intestacy Rules. Inheritance Tax must also be taken into account. Even if the couple have joint assets which will pass to the survivor (including the family home), Inheritance Tax will be relevant on first death if they are not married to each other.
Description of beneficiaries
Another issue to consider carefully is how beneficiaries are described in a Will and it is vital that whoever prepares your Will understands fully the relationships between family members and where the bloodlines lie. For example, if a person leaves their estate to their ‘grandchildren,’ this will include only their bloodline grandchildren and not any step-grandchildren. Is this what you intended?
Assets outside the Will
There are also some assets which are not governed by the terms of your Will – for example most pensions and death in service benefits operate through trust arrangements, and some life policies are held in trust. If this is the case, it means that often the Trustees of the scheme will have a discretion over who receives the benefits. It is therefore important to consider how these assets will be dealt with and what your wishes are concerning those. It can be helpful to have a letter alongside your Will explaining what you intend to happen with these, if otherwise your Will might seem unbalanced between beneficiaries, or you want to confirm your wishes.
Excluding beneficiaries
You may also be considering excluding someone from your Will who might otherwise expect to benefit from your estate, for example an estranged child. Again, it is vital that the person preparing your Will knows of every person who might expect to benefit, so that if you are intending to leave someone out or leave them less, you can be advised appropriately. Your adviser will help you consider whether the excluded beneficiary might have a claim (as both children and step-children could potentially make a claim if they have a financial need), and advise you on how best to ensure that your wishes are upheld.
Conclusion
There can be complex issues arising where there is a blended family, but addressing these issues with careful planning and thought can reduce the risk of your wishes not being followed, or being challenged after your death.
For advice and help tailored to your circumstances, please don’t hesitate to contact our team, Kathryn Caple and Myah Armstrong on 01283 526200.