Is my uncles will scenario complicated?

ALFIE_RAFC

Hi guys,

Looking for a bit of help on behalf of my uncle. He has asked me to give him a bit of help before he makes an appointment with a solicitor to discuss this so he is not going into appointment with no understanding of the situation.

Before I start, my background is financial services. I have a very basic knowledge of straight forward will scenarios, no knowledge of the more complex variety.

My uncle is cohabiting with his partner. They have been together many, many years. They have no children. They own the property they currently live in. It has no mortgage. They have separate savings and investments. My uncle has significantly more in way of savings and investments than his partner.

At both my uncle and partners request I went over to meet them for a cup of tea and a chat about there wills as they have been really anxious about dealing with this as they feel it is going to be a complicated, difficult process.

So the story is that on first death they are happy for the whole estate to pass to the surviving partner. I am led to believe that is the traditional ways married couples will set up will?

Now due to the fact none of them have any kids this is where it complicates things. Obviously if the had a child or children then on 2nd death estate would be split evenly between children.

As they have no children they have other beneficiaries from each of their families. My uncle would like his three brothers to be included in his will and his partner would like her two brothers and mother as beneficiaries.

As far as my understanding goes there is risks associated with this as if my uncle passes away first his partner inherits everything and then when she passes away her beneficiary will inherit my uncles assets and my uncles beneficiaries will receive nothing from my uncles estate.

Although this scenario is complicated to me, I imagine in this day and age that it is a fairly common one which will writers will come across.

Can anyone give me a little bit of advice on how we can ensure both my uncle and his partners beneficiaries are treated fairly as per their wishes?

Thank you

Ms_Chocaholic

Are they joint owners of their home - if they are, they could change the way their home is registered with the Land Registry to "tenants in common" - this would allow them to leave their half of the home to their relatives on their death, but still allowing their partner to remain in the property, or even move home if they wish.

In terms of the cash they have in the bank - if your Uncle has more cash than his partner would need following his death, could he leave that (or a portion of that) in his will to his brothers.

Another issue to think of, whoever dies first, if they leave all their assets to the other upon the first death and the partner that is left requires nursing care, then that could eat up all the assets and extended family members would be left with nothing.

getmore4less

How big are each of their estates, this will be critical in looking at options.

getmore4less

Ms_Chocaholic wrote: »

Are they joint owners of their home - if they are, they could change the way their home is registered with the Land Registry to "tenants in common" - this would allow them to leave their half of the home to their relatives on their death, but still allowing their partner to remain in the property, or even move home if they wish.

In terms of the cash they have in the bank - if your Uncle has more cash than his partner would need following his death, could he leave that (or a portion of that) in his will to his brothers.

Another issue to think of, whoever dies first, if they leave all their assets to the other upon the first death and the partner that is left requires nursing care, then that could eat up all the assets and extended family members would be left with nothing.

For unmarried partners this can have significant bad impacts on IHT

Marcon

Forgive me for raising the point, but have they considered the advantages (not least in terms of IHT, and possibly pensions and other things) of getting married? Hardly the most romantic of reasons, but it is odd how many people respond with 'I hadn't thought of that!'

It does simplify the will making process in some respects, although not all - but it's nothing like as bad as they fear. If they set down in writing what they would like to happen (no fancy legal jargon, just normal English) and take that with them when they see their solicitor, it will help considerably.

Keep_pedalling

Marcon wrote: »

Forgive me for raising the point, but have they considered the advantages (not least in terms of IHT, and possibly pensions and other things) of getting married? Hardly the most romantic of reasons, but it is odd how many people respond with 'I hadn't thought of that!'

It does simplify the will making process in some respects, although not all - but it's nothing like as bad as they fear. If they set down in writing what they would like to happen (no fancy legal jargon, just normal English) and take that with them when they see their solicitor, it will help considerably.

If either of them have an estate over £350k then they would be silly not to enter a marriage or civil partnership, at least as far as inheritance tax is concerned.

They also need to look at life interest trusts to protect the interests of the different beneficiaries of the will.

The main complication is going to be all the what if situations that need to be covered, particularly since all the beneficiaries are of the same generation or older than the testator. One or both wills could easily fail because none of the beneficiaries out lived the testator.

Malthusian

If they're considering leaving their entire estates to each other and then having their collective assets distributed to the various branches of their families on the second death, there really is no reason not to get married.

If they are happy to intertwine their finances to that extent, not getting married is bonkers.

The obvious alternative is to not get married, ensure the house is held as joint tenants (which means it automatically passes to the survivor, and isn't subject to the Will), and leave the surviving partner to live off their own savings and investments for the rest of their life.

If this would leave the survivor (especially the uncle's partner) in penury, they could always put some savings / investments in joint names as well.

Any assets held in single names then get distributed to the respective families as per the Will on each death.

IHT could throw a spanner in the works but it depends on the amounts involved. IHT would be paid by the estate so would generally come out of the amounts distributed to the beneficiaries of the Will, rather than the partner, unless it exhausts the funds in the estate.

The family of the second person to die would get the house and any other assets put in joint names. However, that could be tough luck. As GM4L says, there's a double IHT trap if you leave assets to a life interest trust where the tenant isn't your spouse.