With many households now including children from previous relationships, blended families are more common than ever.
The traditional model of a family with 2.4 children is on the decline and it is more common now to see couples coming together to raise children from previous relationships or marriages. They may then go on to have children together.
The rise of the blended family model can lead to some complicated estate planning issues.
Whilst making a Will is important for every individual, it is particularly important for such families. You will need to think about how you provide for your intended beneficiaries and balance the competing interests of a spouse/partner with those of your biological children, especially as certain categories of beneficiaries can make a family provision claim under the Inheritance (Provision for Family and Dependents) Act 1975. Such claims often cause much distress to all parties as well as significantly increasing timescales and legal costs in respect of the administration of the estate.
Particular thought needs to be given to the following:
Leaving everything to the spouse/partner?
It is common to leave everything to your spouse/partner on the assumption that they will then provide for all of the children in their own Will. Such Wills are commonly referred to as mirror Wills and they usually set out the distribution of the estate upon the death of the first person as well as upon the death of the survivor. However, mirror Wills are unsatisfactory for a number of reasons. Firstly, the surviving spouse/partner can always change their Will after the deceased’s death, leaving little or nothing to the deceased’s own children. Secondly, the children of the deceased will have to wait until the death of the surviving spouse/partner before they inherit and thirdly, the assets of the estate may diminish over time, leaving much less for the deceased’s own children than was originally anticipated.
Providing immediately for children upon the deceased’s death?
Whilst this may be thought to be desirable and a way of achieving certainty that the deceased’s own children will certainly benefit upon their death, care needs to be taken with this approach. If children inherit ahead of a surviving spouse, this may lead to inheritance tax being payable if the value of the deceased’s estate exceeds available allowances. Furthermore, this approach may not provide adequately for the surviving spouse/partner, meaning that they could challenge the Will on the basis of lack of sufficient financial provision for them.
How to deal with the family home?
How should the deceased’s share of a joint family home be dealt with where there is a surviving spouse who needs security to remain living in the property after the deceased’s death but the deceased wants to ensure that his share of the property ultimately passes to his own children?
How can planning with pension funds and life insurance policies assist?
Pensions and the proceeds of life insurance policies fall outside a person’s estate for both inheritance tax and distribution purposes and so these funds should be considered carefully and alongside the other estate assets, to map out how all of the deceased’s assets should be allocated as between the beneficiaries.
How to provide for other children within the family?
It may be the case that you wish to provide for all of the children of the family but on an unequal basis or provide for them in a manner that depends on certain factors that may have arisen by the time of the surviving spouse/partner’s death.
All of the above can be dealt with by the use of Trusts. There are various trust structures that can be used in a Will to give you the assurance and peace of mind that your chosen beneficiaries will receive what you wish them to and cannot be excluded by events or action that is taken after your death.
We can assist you in preparing a tailor-made solution to your estate planning objectives to ensure that your affairs are structured in such a way that provides for all of your intended family members in a secure, yet inheritance tax efficient manner.
For a non-obligation meeting to discuss the above, please contact the Private Client team on 0113 222 3243 or alternatively contact Kanika Sohpal on 0113 336 3384 or firstname.lastname@example.org.
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