Inheritance & Bankruptcy...?

Pepper25

Hi All,

Just need some advice here as iv looked through the forum and can't find any advice on inheritance and bankruptcy.
My mum and dad are quite wealthy and have made a will leaving there estate to my sister and I but I'm sure if they BOTH die then the will comes into force and my sister and I get half of their estate. My concern is that the OR would then use my half to pay off my debts in Bankruptcy. I have done a little research on this along with my dad and this would be the case.
Is there any way my half could be left to my wife or my kids to avoid this?

Advice much appreciated.

silvercar

Your parents can leave their wealth to whoever they like.

seven-day-weekend

silvercar wrote: »

Your parents can leave their wealth to whoever they like.

Unless the OP is in Scotland? I may be wrong but I think there you are not allowed to disinherit your children.

Keep_pedalling

seven-day-weekend wrote: »

Unless the OP is in Scotland? I may be wrong but I think there you are not allowed to disinherit your children.

It’s only movable assets that applies to, if all your wealth is tied up in property then you can leave it to who you like.

Keep_pedalling

Pepper25 wrote: »

Hi All,

Just need some advice here as iv looked through the forum and can't find any advice on inheritance and bankruptcy.
My mum and dad are quite wealthy and have made a will leaving there estate to my sister and I but I'm sure if they BOTH die then the will comes into force and my sister and I get half of their estate. My concern is that the OR would then use my half to pay off my debts in Bankruptcy. I have done a little research on this along with my dad and this would be the case.
Is there any way my half could be left to my wife or my kids to avoid this?

Advice much appreciated.

What percentage of your inheritance would be used up to pay your creditors? How old are your children?

Mouse007

Pepper25 wrote: »

Hi All,


Is there any way my half could be left to my wife or my kids to avoid this?

Absolutely yes, your parents simply change their wills to that effect and can change them back once you are discharged. Mine did exactly that.

Keep_pedalling

Mouse007 wrote: »

Absolutely yes, your parents simply change their wills to that effect and can change them back once you are discharged. Mine did exactly that.

Although there is the risk that it all goes pear shaped with you marriage, and I would not want a large inheritance tied up in trust for years for young children who will then have full access to it at 18.

One other option is for your parents to cover the risk of their early deaths with a second death term policy. If they are currently in good health this is a cheap option. We have done this to cover any IHT due on gifts we have made to our children just in case we don’t make the full 7 years.

Pepper25

Thank you for the replies.

Children are 15 & 17.5

My Parents are 78 & 77 Dad is not in good health and will die before mum, its if they die together in a car crash or something like that. On reflection I think it would be cleaner if its just left to me. Dad has got advice on it form his bank and they have suggested opening a trust to leave it in but thats 15k to start up the trust and then 3k a year to maintain it. Seems a extortionent to me.
Ill speak to Dad about the second death team policy as that may be a way forward.

Keep_pedalling

Pepper25 wrote: »

Thank you for the replies.

Children are 15 & 17.5

My Parents are 78 & 77 Dad is not in good health and will die before mum, its if they die together in a car crash or something like that. On reflection I think it would be cleaner if its just left to me. Dad has got advice on it form his bank and they have suggested opening a trust to leave it in but thats 15k to start up the trust and then 3k a year to maintain it. Seems a extortionent to me.
Ill speak to Dad about the second death team policy as that may be a way forward.

He would do well got avoid using banks for trusts or probate their fees are extortionate. Best to consult a local IFA, especially if IHT is an issue. Unfortunately your dad’s health will probably bar the insurance route.

Pepper25

Keep_pedalling wrote: »

He would do well got avoid using banks for trusts or probate their fees are extortionate. Best to consult a local IFA, especially if IHT is an issue. Unfortunately your dad’s health will probably bar the insurance route.

Ill be speaking to Dad today so will ask him. Thank you.

macman

Should your parents both die simultaneously (you used a car crash as an example), then the eldest is presumed to have died first, their estate passes to the youngest (if that is what their will specifies), and the estate is distributed according to their will in turn.
Your (wealthy) parents should be taking proper legal advice on the best and most tax efficient structure.
I don't understand your comment 'if they both die the will comes into force'? They must have separate wills.