21st March 2016
As we live longer, more adults are marrying a second or third time. Divorce among the over-60s, otherwise known as silver splitters, has risen by a third in the past decade. While most adult children are happy that their parents have companionship in old age, they may have worries over inheritance.
Ultimately, most of us want our children to inherit our assets at some point in the future. But if we have a partner or spouse it is also usual to want them to benefit first, for the rest of their life, before assets are passed to the children.
If you make a will leaving everything outright to your partner on your death, there is a possibility that your children may not receive anything. There is nothing to stop your partner from disinheriting them. Even if you and your partner have made ‘mirror’ wills which leave everything to the children on the second death, your partner could later change their will if they wish to.
Life interest trust in your will
One solution is to have a life interest trust written into your will. The trust is set up to provide for your partner or spouse for the remainder of their lifetime, but ensures that the capital passes to the children at the end of the day.
Discretionary trust in your will
Another option is setting up a discretionary trust in your will which allows your trustees to benefit both spouse and children at the same time. The will should be supported by a letter of wishes to the trustees setting out guidance as to how your trustees should consider using their discretion.
Leave gifts to your children on the first death
If there are adequate assets, particularly where your spouse or partner is sufficiently financially secure without requiring your entire estate, gifts to children may be considered on the first death. You could even put your gift into trust for your children, particularly if they are minors. This can have inheritance tax consequences and advice should be taken on your individual situation.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice, and the law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.