Our advice and strategies are as individual as your circumstances, however the paragraphs below show some of the common issues faced by families.
Many married people or partners in a civil partnership intend that if they die their wealth be used to support the surviving partner whilst they still live but then pass to children or other loved ones when both partners have passed away.
Unfortunately, in many instances there is no valid Will in which case the laws of intestacy apply and property will pass in accordance with law rather than a person's wishes. A spouse who is not married or in a civil partnership is not recognised under intestacy and will have no automatic right to the inheritance. Similarly, many people in marriages or civil partnership assume all of their wealth will automatically pass to their spouse if they die without a Will; this is incorrect especially if there are children or significant wealth.
Virtually all couples should have Wills but most have 'simple' Wills directing all assets to the survivor. Your property may be directed to each other by drafting a simple Will, however, this will not ensure that your assets pass to your children or other loved ones once your partner has passed away. There are a number of potential threats to the family wealth.
•Variation of survivor's Will – If you leave all of your assets to your spouse there is nothing to stop them varying their Will and altering or removing entirely the entitlement of a child or other person.
•Remarriage of spouse – If a partner dies leaving all of their wealth to their spouse and the survivor remarries the inherited family wealth could pass to their new spouse rather than the children or other loved ones.
•Divorce of spouse - Similarly, if the survivor were to remarry after the first death and then divorce the assets you had intended to leave for your children could be lost in a marital settlement.
•Care costs of survivor – Local authorities are not required to contribute anything to residential care costs when the person requiring care has assets of over £23,250 - this includes the value of the home if it is solely owned by the person requiring care. Care costs can rapidly annihilate family wealth unless good planning is in place.
•Bankruptcy - Your wealth could be lost if your partner were to face financial difficulties or bankruptcy in the future.
•Further Inheritance Tax - If your wealth is left directly to your partner, the assets will form part of their estate when they die. Up to 40% of the asset value could be lost in Inheritance Tax.
•Wealth to children – When both have died you will probably wish for the bulk of your wealth to pass to your children. However, a lot of family wealth is lost when children divorce, die or require care. In some instances it may be worthwhile to separate the children from ownership of the wealth to protect from these eventualities.
For these reasons and more, it is often beneficial to direct your assets into a Trust. The surviving partner may fully benefit from the assets and retain control but the wealth will not usually be treated as theirs in the event of any of the above situations. This should assist the family wealth in passing to the children and further generations.
Those people who will have an Inheritance Tax liabilty upon death even with effective Wills may need to consider further lifetime planning to reduce their estate prior to death.
We can assist you in drafting suitable Wills and Trusts to achieve these aims and have helped many clients in Brighton, Hove, Sussex, London and Reading.
Please contact us for more information.
Many married people or partners in a civil partnership intend that if they die their wealth be used to support the surviving partner whilst they still live but then pass to children or other loved ones when both partners have passed away.
Unfortunately, in many instances there is no valid Will in which case the laws of intestacy apply and property will pass in accordance with law rather than a person's wishes. A spouse who is not married or in a civil partnership is not recognised under intestacy and will have no automatic right to the inheritance. Similarly, many people in marriages or civil partnership assume all of their wealth will automatically pass to their spouse if they die without a Will; this is incorrect especially if there are children or significant wealth.
Virtually all couples should have Wills but most have 'simple' Wills directing all assets to the survivor. Your property may be directed to each other by drafting a simple Will, however, this will not ensure that your assets pass to your children or other loved ones once your partner has passed away. There are a number of potential threats to the family wealth.
•Variation of survivor's Will – If you leave all of your assets to your spouse there is nothing to stop them varying their Will and altering or removing entirely the entitlement of a child or other person.
•Remarriage of spouse – If a partner dies leaving all of their wealth to their spouse and the survivor remarries the inherited family wealth could pass to their new spouse rather than the children or other loved ones.
•Divorce of spouse - Similarly, if the survivor were to remarry after the first death and then divorce the assets you had intended to leave for your children could be lost in a marital settlement.
•Care costs of survivor – Local authorities are not required to contribute anything to residential care costs when the person requiring care has assets of over £23,250 - this includes the value of the home if it is solely owned by the person requiring care. Care costs can rapidly annihilate family wealth unless good planning is in place.
•Bankruptcy - Your wealth could be lost if your partner were to face financial difficulties or bankruptcy in the future.
•Further Inheritance Tax - If your wealth is left directly to your partner, the assets will form part of their estate when they die. Up to 40% of the asset value could be lost in Inheritance Tax.
•Wealth to children – When both have died you will probably wish for the bulk of your wealth to pass to your children. However, a lot of family wealth is lost when children divorce, die or require care. In some instances it may be worthwhile to separate the children from ownership of the wealth to protect from these eventualities.
For these reasons and more, it is often beneficial to direct your assets into a Trust. The surviving partner may fully benefit from the assets and retain control but the wealth will not usually be treated as theirs in the event of any of the above situations. This should assist the family wealth in passing to the children and further generations.
Those people who will have an Inheritance Tax liabilty upon death even with effective Wills may need to consider further lifetime planning to reduce their estate prior to death.
We can assist you in drafting suitable Wills and Trusts to achieve these aims and have helped many clients in Brighton, Hove, Sussex, London and Reading.
Please contact us for more information.