Growing numbers of couples today are marrying or remarrying with one or both parties having children from a previous relationship. This creates a blended family. With the rise in blended families, it is becoming increasingly important for couples to think about ways in which they can provide for their partner, should they die first, whilst also ensuring that their children will benefit from their estate.
In this article, specialist contentious probate solicitor Aimee Phillips discussed the pitfalls made by blended families looking to provide for both, their partner and their children, and the best course of action to avoid inheritance disputes between blended families.
The most common mistakes that people make when trying to balance the two interests are:
When one spouse dies without leaving a Will, the rules of intestacy will apply to the administration of the deceased’s estate. Unfortunately, this can sometimes cause tensions amongst family members if they believe the rules of intestacy do not truly reflect what the deceased would have wanted.
Under the rules of intestacy, if the estate is worth £270,000 or less, the surviving spouse of the deceased will inherit the whole of the estate. If the estate is in excess of £270,000, the surviving spouse will also inherit half of the amount which is in excess of £270,000. The remainder will then be divided between any surviving children. What this means in practice is, quite often the children end up with nothing.
Tensions are further increased if the surviving spouse also dies intestate and their estate (along with everything they inherited from their spouse who died before them) passes to their surviving children, leaving their stepchildren without any inheritance at all.
Another common mistake is leaving everything to the surviving spouse on the mutual understanding that when the surviving spouse dies, they will make provision in their Will for the children.
Marriage is a relationship based upon love and trust and it is therefore natural for a person to assume that, upon their death, their surviving spouse will ensure that their children are provided for. Regrettably, this is not always the reality.
Mirror Wills may also be problematic for blended families. Mirror Wills are virtually identical Wills whereby each spouse leaves everything to the other spouse (should they die before them) and, upon the death of the surviving spouse, everything is left to their children. What is important to note however is that each party is free to revoke their respective Will at any time before or after the death of the other and shall not be under an obligation to dispose of the property in accordance with the Mirror Wills. In practice, this means that the spouse who dies first cannot guarantee that their children will benefit from their estate at all. Even if one spouse decided to change their Will whilst the other spouse was still alive, there is no obligation on that spouse to inform the other of their new Will.
If we look at this in the context of blended families, one spouse could die thinking that their children from a previous marriage will be looked after following the death of the surviving spouse but in reality, the surviving spouse could rewrite their Will cutting their stepchildren out completely and leaving everything to just their own children.
We must distinguish Mirror Wills from Mutual Wills. Mutual Wills bind the surviving spouse; however, they are extremely inflexible and do not provide for any change of circumstance. For example, if the surviving spouse’s relationship with a beneficiary completely broke down, that beneficiary would still benefit from the Will. Mutual Wills are therefore not always appropriate either.
There are various options available which are suitable for blended families. These include:
What is a Life Interest Trust? A Life Interest Trust will allow one beneficiary to benefit from an asset or income during their lifetime and, when that person’s beneficial interest comes to an end, usually on death or remarriage, that trust asset or income passes to another beneficiary.
These are popular with blended families. If we use the marital home as an example, a lifetime trust will allow the surviving spouse to have a lifetime interest in the property, i.e. live in the property until they die. Upon their death, the property will pass to their children.
A Life Interest Trust is also a good way of protecting assets which may be lost to bankruptcy, divorce (if the surviving spouse remarries), care home fees, and so forth. The surviving spouse never owns the assets, merely holds them on trust for future beneficiaries.
Alternatively, leaving specific or residuary gifts to children will allow for peace of mind that they will receive a legacy no matter what. The testator can state clearly what they would like each child to inherit so there can be no grey area. An example of this would be to leave a child a legacy of £10,000 or 20% of the residuary estate.
Couples may also want to consider entering into a declaration to hold the marital home (or any other property they jointly own) on trust as tenants in common in specified shares, for example, 50/50. This would mean that when one spouse dies, their 50% share of the property falls to their estate and can be left to beneficiaries in their Will. This is the alternative to owning the property as joint tenants to which the principle of survivorship applies, i.e. when one spouse dies, the property is automatically transferred into the sole name of the surviving spouse
Another thing to be mindful of is the fact that any Will written prior to getting remarried will become null and void in the event of that marriage unless the Will was made in contemplation of that marriage. A new Will will have to be signed upon remarriage, otherwise, the rules of intestacy will apply.
We appreciate that it is difficult to balance competing interests, especially because you do not want to appear to distrust your spouse as this could feel hurtful. However, it is important to have these hard conversations while you can to save your loved ones a lot of heartache in the future. If you are a member of a blended family and you feel as though sufficient provision has not been made for you in a Will, you may have a claim against the estate. The contentious probate team here at Holmes & Hills LLP may be able to assist you.
If you need to contest a will, you can find out if Grant of Probate has already been issued.
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