First Will, is it too complex?

Ma77hew

So I'm looking to have my first will written up, I have a wife and daughter.

I want my wife to inherit all in my death, in both of ours my daughter, failing that my parents.

The estate I guess would end up being worth around £1.5m with insurance payouts and house etc, which is clearly a lot of money, more than I expected when I started thinking about it.

What I'd like to do for my daughter is assign guardians, most likely my sister & husband, and then set rules around how the inheritance should be used.

Here is the list I came up with:
I'd like my daughter to go to private school, we are planning to send her, so whilst she inherits everything I want it put in trust somewhere for her, with an annual amount paid to the guardians to cover her upkeep and the school fee's etc, I estimate £25k per annum would be more than sufficient, and should be easily covered by interest payments.

When she reaches 18, I'd like the £25k to be split £20k to her, £5k for the guardians providing she still lives with them, so they are not out of pocket, but no rent should be charged to her by the guardians. If she lives independently I'd like the full amount paid to her. I figure she will be at uni and need the money to be more independent.

When she reaches 21 I'd like 25% of the balance paid to her, then at 25, 50% of the remaining balance and the £25k per annum to stop, at 30 the remaining balance to be paid.

I figure, she may blow the money once, but maybe by the 3rd time she'll have learn't lol.

Is it possible to structure inheritance in this way? Is it overly complicated? Will the solicitors laugh at me?

My thought process is, I'd want her to be financially ok, but I don't want her in a position where she gets a lump sum to early for her to know how to manage it. If I had inherited that sort of money at 21, I suspect I would have blown most of it before I was 25.

Also who would arrange the money until its paid out, i had a quick google but couldn't figure out where it could be invested.

Mtl2015

I'm not an expert but as far as i know you can structure it however you want.

My friends husbands parents both died within a month of each other and had a similar set up though - He was only 16 when they died.

The house was left to him and his brother, with X amount of funds to ensure utilities were paid until they reached a certain age (25 i think), allowances for other living expenses etc.

My friends parents and solicitor managed it all i believe.

Mojisola

One thing to remember is that a will becomes a public document - do you want anyone who chooses to buy a copy to know all the details about your plans for your daughter?

Discuss it all with a solicitor. It may be better to set up a trust and leave instructions for your chosen trustees about managing the inheritance.

Also, don't try to micromanage the future from beyond the grave. There could be reasons why what you think is right now won't be the best choice in the future.

jackyann

It sounds reasonable, and a solicitor can help you decide how to structure a trust.
However, do give a thought to the aunt, uncle & their family. It is usually expected that family members are not "paid" for caring for a child, but of course get money to provide that care. However, it can lead to inequalities.
If your sister & husband are well off, and likely to remain so, it may not be a problem. However, in this situation, I arranged to leave my sister a substantial sum, on condition that she cared for our children.
My reasoning was that I wanted her to be able to buy a bigger family home. I wanted her to have a decent cushion so the family could be equal. For instance: maybe my kids could go on a school trip with their trust money, and her kids couldn't afford to go - that wouldn't foster a happy family! Maybe they would all enjoy doing some sport that turned out quite expensive - I'd like all the kids in that "new" family to have that choice.

Bear in mind that school fees are only part of a private education - there are specialist trusts who will help with that side of things. But it may be simpler, if you trust your sister, to say that she should make decisions about your daughter's education (and out of school activities) as she sees fit, bearing your wishes in mind.

theoretica

How old is your daughter? Have you thought about inflation by the time she is 25?

Personally, I think that your plan does sound too complicated, and not flexible enough for an unknown future. Better in my mind to choose financial trustees you really trust (who do not need to be her personal guardians and maybe including a professional) and make the trust more discretionary. Your daughter may have a good use for more money early, anything from becoming an excellent violinist and needing a great instrument to needing her own house before she is 21.

g6jns_2

Ma77hew wrote: »

So I'm looking to have my first will written up, I have a wife and daughter.

I want my wife to inherit all in my death, in both of ours my daughter, failing that my parents.

The estate I guess would end up being worth around £1.5m with insurance payouts and house etc, which is clearly a lot of money, more than I expected when I started thinking about it.

What I'd like to do for my daughter is assign guardians, most likely my sister & husband, and then set rules around how the inheritance should be used.

Here is the list I came up with:
I'd like my daughter to go to private school, we are planning to send her, so whilst she inherits everything I want it put in trust somewhere for her, with an annual amount paid to the guardians to cover her upkeep and the school fee's etc, I estimate £25k per annum would be more than sufficient, and should be easily covered by interest payments.

When she reaches 18, I'd like the £25k to be split £20k to her, £5k for the guardians providing she still lives with them, so they are not out of pocket, but no rent should be charged to her by the guardians. If she lives independently I'd like the full amount paid to her. I figure she will be at uni and need the money to be more independent.

When she reaches 21 I'd like 25% of the balance paid to her, then at 25, 50% of the remaining balance and the £25k per annum to stop, at 30 the remaining balance to be paid.

I figure, she may blow the money once, but maybe by the 3rd time she'll have learn't lol.

Is it possible to structure inheritance in this way? Is it overly complicated? Will the solicitors laugh at me?

My thought process is, I'd want her to be financially ok, but I don't want her in a position where she gets a lump sum to early for her to know how to manage it. If I had inherited that sort of money at 21, I suspect I would have blown most of it before I was 25.

Also who would arrange the money until its paid out, i had a quick google but couldn't figure out where it could be invested.

Go and see a solicitor who will be able to give you proper advice. Also remember that your wife should make a will. Finally R ember wills need to regularly updated say every five years.

BobQ

g6jns wrote: »

Go and see a solicitor who will be able to give you proper advice. Also remember that your wife should make a will. Finally R ember wills need to regularly updated say every five years.

I agree, if you are likely to leave £1.5m a few hundred quid to set up a trust under a will is well worth doing. You may also need some IHT advice.

Crabapple

What you are proposing is quite complex, although it is useful to have firm ideas about how the funds would be used.

I suspect that any Solicitor will suggest making the Will rather more straightforward and a lot of the detail would go in a side letter of guidance to your Trustees.

You'll need to pick the Trustees carefully as the administration of the Trust will be an ongoing duty that needs work regularly. If you pick family you may need to provide that they can instruct lawyers/accountants as needed to make sure all formalities are complied with.

I think as the others have said you do need to consider payment to the guardians as they will have a financial cost to caring for your daughter. You also need to give the Trustees some flexibility to deal with funds to take into account the unexpected!

Ma77hew

Thanks for the responses, they have been really helpful, gives me an idea of what to discuss with solicitor.

I am going to see a solicitor I just wanted an idea of whether or not what I was thinking of asking for was possible, and the wife and I will make the same/similar wills.

With regards to some of the comments, my daughter is only just turning 1, so yes the £25k would need to be uplifted for inflation.

The school fee's that we are looking at average around £10k per annum, so I would have thought the remaining £15k was enough for my sister to not be burdened with costs of raising her.

I hadn't considered gifting money to her for her to buy a bigger house though, that's actually a really good idea.

Her daughter is 10 years older than mine, she's 11 mine is just turning 1, so I wouldnt expect any equality issues to rise. Though, she is still young enough to have more I suppose.

Sounds like the best thing to do is to list guidelines of how I'd like the inheritence to be managed, but then to set up these trustee's, I have 4 siblings including my sister so may go down that route, unfortunatly other than work colleagues, I wouldnt say I was flush with people to ask.

When you say add a professional to the trust, is that a paid professional? or someone I know thats a professional? Might sound daft but I have no idea about how these things work, can I pay a company to oversea it/join, that would probably be a good idea.

Whilst I trust my sister to raise my daughter in a similar way that I would, I wouldn't trust her with a blank check lol, her husband I would, but as people comment who knows what might happen in the future.

All I really want to do, is ensure my sister isn't burdened with the expense of raising her. That my daughter doesn't inherit the money before she is wise enough not to blow it.

Crabapple

You will need to name at least 2 trustees because the trust is for a child, but can have up to 4.

The posts above were probably referring to a paid professional trustee such a a Solicitor or Accountant. They would be able to deal with any legal and/or tax requirements.

It's worth considering this in a situation where there is quite a large sum of money to be managed. There will almost certainly be annual tax returns to be completed. Bear in mind that a professional will probably charge an annual fee to the trust for acting as trustee as well as for any work carried out. However, they should give you an idea of these costs at the time you agree to appoint them.

It's not going to be a precise sum as they can't know how much work will be involved, but if they can't give you some kind of an idea then definitely don't do it!

If you appoint your family make sure they are permitted to instruct and pay professionals to deal with work as it is needed so they can for example get an annual tax return prepared.

securityguy

Firstly, insurance payouts usually aren't part of your estate, they are paid directly to the beneficiary via your expression of wishes form (check with your insurance company or pension scheme). It is unusual for life insurance payouts to go via the estate because of the serious IHT implications.

Secondly, aren't bare trusts which restrict payment past the age of 21 rather pointless? A lawyer will be needed to comment, but doesn't Saunders v Vautier (1841) permit the beneficiaries of a trust to demand it be transferred to them at the age of 21 anyway?

Thirdly, private schools that only cost £10k are in increasingly short supply, and notoriously the rate of increase of school fees is massively above the rate of inflation more generally.

Fourthly, I'd refuse to be a child's guardian under the circumstances you outline (and the terms of my own will were radically different when I had children of an appropriate age). It makes no provision for housing or cars, so it means I would have to run a larger house and car which there isn't enough money to fund. It also has the problem of producing a child in my household for whom there is substantial money, but nothing so that (for example) my own children can live to the same standard: I simply would not accept having a privately educated niece living in my house while my own children were reliant solely on my income. I absolutely wouldn't accept having a child doing their A Levels in my house with twenty grand a year in their pocket: why would I do that?

There's also the problem that after school care is expensive and with more than two children most people end up with one partner working part time for many years. I suspect as you haven't had a child of school age yet your understanding of the costs involved is small.

You're micromanaging everyone from beyond the grave and they don't have to accept the situation (and can refuse to after you've died: guardians aren't bound to act as such when it comes to it). "All I really want to do, is ensure my sister isn't burdened with the expense of raising her." You're rather taking your sister's good will for granted.

I simply set up a discretionary trust with my parents and my brother as trustees, on the assumption that one or the other would take my children in, and gave those trustees very wide powers. If you trust your sister with your child but don't trust her with your money, then I think you need to think about what you trust her with.