Writing a Will (the estate as opposed to life insurance and pension).

mp203

p00hsticks said:

Would it be simpler to take out a separate insurance policy specifically to pay off the mortgage on death ? 

Also I'm assuming that your ex has full custody of your daughter - if not then I think you also need to include naming a guardian to take over your parental responsibilities for her....

Thanks.
The mortgage is only £10k or so; would it be worth taking out a separate policy for that?

Yes, my ex has full custody.

mp203

Keep_pedalling said:

You should not attempt to DIY this, please get your will drawn up with a local solicitor. Your prnsion falls outside your estate, and if written in trust so does your life insurance. 

Thanks. 

I have been in touch with a company to draw up the will and been quoted approx. £200.

And I was aware that my pension and life insurance don't go in the will. But do you know if the pension company will agree to pay out to my estate (which is effectively paying out to my daughter)? As I said, I'm hoping for the pension money to pay off my mortgage, other debts, and expenses.

Keep_pedalling

mp203 said:

Keep_pedalling said:

You should not attempt to DIY this, please get your will drawn up with a local solicitor. Your prnsion falls outside your estate, and if written in trust so does your life insurance. 

Thanks. 

I have been in touch with a company to draw up the will and been quoted approx. £200.

And I was aware that my pension and life insurance don't go in the will. But do you know if the pension company will agree to pay out to my estate (which is effectively paying out to my daughter)? As I said, I'm hoping for the pension money to pay off my mortgage, other debts, and expenses.

Sounds like a will writing company, you really need a STEP solicitor, this is not something you should penny pinch on.

https://www.step.org/about-step/public

mp203

msb1234 said:

Who’s going to pay for the upkeep of your house until your daughter is 18? Also, she will lose any first time buyer status if the house isn't sold. You’re assuming here that she’d want to keep the house - she very well may not. This will impact her financially when she wants to buy another property. 

I suppose you have your reasons for handing over a substantial sum of money to your ex instead of all your estate going to your daughter - it seems a bit odd though. Your debts will have to be settled before your estate is distributed - leaving your life insurance to your ex means that it would not be able to be used to pay off your debts. The house would have to be sold to pay the mortgage. In addition, if your ex got married, her husband would be entitled to half of that money. 

The simplest thing to do is leave your estate in its entirety to your daughter. 

Thanks.

I'm hoping my ex (my daughter's mum) will look after the house until my daughter is 18. She will be the trustee and, if necessary, can use the money in the estate. Once my debts are settled there will be some left over for my daughter. But I'm hoping she will let the property so there will be an income rather than it being a net expense.

As for my daughter losing first time buyer status; I don't know much about that. I will look into it, thanks. In the meantime, one question on that; Might the rental income (up until she is 18) being put away for her, outweigh any potential gain from first time buyer status? Also, I'm thinking that if her mum does let the property for her, and then, when she turns 18, she continues to let it, she could have that rental income for longer.

Regards leaving me ex the insurance money. I did wonder if that was unusual. But I think she deserves it. And my daughter gets the property and the balance fo the pension money once the debts are paid (if I can work it that way).

As for the house having to be sold to pay the debts and expenses. Yes, that is a concern. But why can't the pension money be used to pay the debts etc?

Regards my ex getting married. She is already as good as married and I'm happy for her partner to benefit from her inheritance.

I know it would be simpler to leave the entire estate to my daughter but I do want to leave something to her mum.

mp203

Savvy_Sue said:

mp203 said:

My daughter is a child (under 18) and I’m writing my will imagining me dying before she turns 18 (if I’m still alive when she turns 18 I can rethink it, and re-write the will if necessary). I want her mum to let the house until my daughter is 18, and then my daughter can take it from there; and my savings won’t cover all of my debts etc, so I’m thinking those will have to be paid for from either my life insurance, or my pension.

<SNIP>

Nb. My daughter’s mum, my ex, has agreed to be the executor, but she doesn’t know the contents of the will. She will also be the trustee. I’ve advised/requested in a separate letter that she keeps the house for my daughter until she is 18, and uses the pension to settle the debts etc. And that I wish for her to receive the money from my life insurance policy.

You say you want your ex to rent the house out on behalf of your daughter. IMO that's a big ask, with all the responsibilities of being a landlord these days, and it can go terribly wrong. It appears to be in a Letter of Wishes rather than the will itself, so it's not binding, but still. 

And personally I can't quite follow the logic. If it's being let out, it won't be 'your daughter's home' any more: someone else will be living there. And it may be quite painful for her to see someone else making changes to it, when it's still 'her house', but she has no control over it until she's 18. 

Also do consider whether it's a suitable house for letting out: in good repair, in the right area, with a decent rental market around. If it's not, don't do it!

Thanks.

I appreciate that it's a big ask but it's for the benefit of our daughter and her mum loves her so I think she would be ok with it. But as you said it is only a wish of mine; if he mum felt it was too much I wouldn't mind her selling the property and banking the proceeds for our daughter. 

As for it being painful for my daughter to see someone else living there, making changes etc; I've asked her mum, in a letter (to be seen with the Will), not to tell my daughter of her inheritance until she is 18. So she won't know anything about it until then. Once she turns 18 she can think about selling it, continuing to let it, or living in it herself (if possible, given the tenancy etc).

Regards suitable for letting etc. Yes, thanks, its in good repair, the right area, decent rental market around, etc. But, I'll leave that to her mum's discretion, judgement. It will just be a wish of mine.

mp203

Keep_pedalling said:

mp203 said:

Keep_pedalling said:

You should not attempt to DIY this, please get your will drawn up with a local solicitor. Your prnsion falls outside your estate, and if written in trust so does your life insurance. 

Thanks. 

I have been in touch with a company to draw up the will and been quoted approx. £200.

And I was aware that my pension and life insurance don't go in the will. But do you know if the pension company will agree to pay out to my estate (which is effectively paying out to my daughter)? As I said, I'm hoping for the pension money to pay off my mortgage, other debts, and expenses.

Sounds like a will writing company, you really need a STEP solicitor, this is not something you should penny pinch on.

Thanks.
I will look into a STEP solicitor. I was thinking of seeing an IFA first (£100 or so?) and then going to the will writing company (£200 or so). Are you suggesting seeing a STEP solicitor for advice AND to write the will? Or to see a STEP solicitor for advice, and then go to a will writing company?

RAS

Please do not go near a will writing company.

You've got a complex family situation, and complex finances.  Your daughter will not thank you if you screw up. You may want to talk to your pension provider about their rules and then go to see a STEP solicitor, who will write your will. 

Get it stored with the government probate service. Anything you leave your daughter has to be held in trust. Do you have another adult in your life who could act jointly with your ex partner? So, there is someone there if anything happens to your ex-partner and someone to share the burden with her?

Savvy_Sue

WRT your expression of wishes for your pension: you may find that you already nominated your ex, before she was your ex. However, I'd strongly recommend updating this, along the lines of "I nominate EX, with whom I remain on good terms, as we share a child who lives with EX." 

That then rules out the possibility that you just forgot to update the expression of wishes when you split up, and also explains why. They may still decide to pay out to your DD (I can't imagine it would be to anyone else, unless you remarry), and I don't know how they'd do that if she was still under 18 when you died. May be worth a phone call. 

Savvy_Sue

mp203 said:

Savvy_Sue said:

mp203 said:

My daughter is a child (under 18) and I’m writing my will imagining me dying before she turns 18 (if I’m still alive when she turns 18 I can rethink it, and re-write the will if necessary). I want her mum to let the house until my daughter is 18, and then my daughter can take it from there; and my savings won’t cover all of my debts etc, so I’m thinking those will have to be paid for from either my life insurance, or my pension.

<SNIP>

Nb. My daughter’s mum, my ex, has agreed to be the executor, but she doesn’t know the contents of the will. She will also be the trustee. I’ve advised/requested in a separate letter that she keeps the house for my daughter until she is 18, and uses the pension to settle the debts etc. And that I wish for her to receive the money from my life insurance policy.

You say you want your ex to rent the house out on behalf of your daughter. IMO that's a big ask, with all the responsibilities of being a landlord these days, and it can go terribly wrong. It appears to be in a Letter of Wishes rather than the will itself, so it's not binding, but still. 

And personally I can't quite follow the logic. If it's being let out, it won't be 'your daughter's home' any more: someone else will be living there. And it may be quite painful for her to see someone else making changes to it, when it's still 'her house', but she has no control over it until she's 18. 

Also do consider whether it's a suitable house for letting out: in good repair, in the right area, with a decent rental market around. If it's not, don't do it!

Thanks.

I appreciate that it's a big ask but it's for the benefit of our daughter and her mum loves her so I think she would be ok with it. But as you said it is only a wish of mine; if he mum felt it was too much I wouldn't mind her selling the property and banking the proceeds for our daughter. 

As for it being painful for my daughter to see someone else living there, making changes etc; I've asked her mum, in a letter (to be seen with the Will), not to tell my daughter of her inheritance until she is 18. So she won't know anything about it until then. Once she turns 18 she can think about selling it, continuing to let it, or living in it herself (if possible, given the tenancy etc).

Regards suitable for letting etc. Yes, thanks, its in good repair, the right area, decent rental market around, etc. But, I'll leave that to her mum's discretion, judgement. It will just be a wish of mine.

I do wonder if you're overthinking this, and trying to see into the future and control it. 

I don't know how old your DD is at the moment, but I think that at some point before the age of 18 she might be curious about you, what you may have left her, what happened to your house etc etc etc. 

What's her mum going to do then? 

Another thought: your DD can't own a house before she's 18, so some sort of trust would need to be set up. I don't know whether having a house left to you 'in trust' affects the FTB status, but I'm pretty sure that the moment she was the owner, she'd lose that status, and she'd lose it forever - ie even if she sold the home, she still wouldn't get any of the FTB benefits. 

Of course we don't know what they'll be worth when that time comes, but there are complications. 

poseidon1

mp203 said:

msb1234 said:

Who’s going to pay for the upkeep of your house until your daughter is 18? Also, she will lose any first time buyer status if the house isn't sold. You’re assuming here that she’d want to keep the house - she very well may not. This will impact her financially when she wants to buy another property. 

I suppose you have your reasons for handing over a substantial sum of money to your ex instead of all your estate going to your daughter - it seems a bit odd though. Your debts will have to be settled before your estate is distributed - leaving your life insurance to your ex means that it would not be able to be used to pay off your debts. The house would have to be sold to pay the mortgage. In addition, if your ex got married, her husband would be entitled to half of that money. 

The simplest thing to do is leave your estate in its entirety to your daughter. 

Thanks.

I'm hoping my ex (my daughter's mum) will look after the house until my daughter is 18. She will be the trustee and, if necessary, can use the money in the estate. Once my debts are settled there will be some left over for my daughter. But I'm hoping she will let the property so there will be an income rather than it being a net expense.

As for my daughter losing first time buyer status; I don't know much about that. I will look into it, thanks. In the meantime, one question on that; Might the rental income (up until she is 18) being put away for her, outweigh any potential gain from first time buyer status? Also, I'm thinking that if her mum does let the property for her, and then, when she turns 18, she continues to let it, she could have that rental income for longer.

Regards leaving me ex the insurance money. I did wonder if that was unusual. But I think she deserves it. And my daughter gets the property and the balance fo the pension money once the debts are paid (if I can work it that way).

As for the house having to be sold to pay the debts and expenses. Yes, that is a concern. But why can't the pension money be used to pay the debts etc?

Regards my ex getting married. She is already as good as married and I'm happy for her partner to benefit from her inheritance.

I know it would be simpler to leave the entire estate to my daughter but I do want to leave something to her mum.

You have provided some useful additional background information to which I will respond.

* I concur with RAS and Keep_pedalling, do not use a will writing firm for the drafting of your will, frankly if I had my way that particular industry would be banned as causing far more harm than good. Find a STEP qualified lawyer.

* As for the will itself, you will be establishing a Bereaved Minors Trust for your daughter the main provisions of which she will be entitled to the income until age 18 at which point she becomes absolutely entitled to the capital and the trust ends. See link below for an explanation of how this works ( this is not an endorsement to use Irwin Mitchell by the way!). Presumably you will also be naming your ex as legal guardian if she does not already have custody of your daughter?

https://www.irwinmitchell.com/news-and-insights/expert-comment/post/102j9nd/twist-of-fate-safeguarding-bereaved-minors-through-succession-planning#:~:text=A Bereaved Minor's Trust (BMT,following the rules of intestacy.

* If your  ex partner chooses to retain the property as an ongoing investment for the trust (rather than sell it), this will mean your daughter losing first time buyer's status for future SDLT purposes. Don't worry about it. She will have potential access to your home for her own use, or the sale proceeds thereof ( less CGT if any  )  would put her in a cash purchaser position far more beneficial than the majority of young people her age, notwithstanding losing FTB status. As for the trust itself the net income will be liable to tax at 20%, but with some or all of this recoverable on your daughter's behalf depending on her personal allowance at that time.

* As regards your DC pension pot, your expression of wish letter should direct the pension scheme trustees to pay the accumulated pot to the trust fund established under your will.  Your partner will have power to use part of the cash to pay off the mortgage and any other debts at death , leaving any remaining cash to add to the trust of the house( if not sold). The STEP lawyer will advise on suitable wording  for the EOW letter.

* Can't see a problem with directing the life policy into a separate trust for your partner given the circumstances you have outlined. However, I reiterate getting a suitable trust form from your insurance company for the purpose. It is all standard procedure from the life company's point of view. In fact its a shame more people don't do  this as a matter of good practice with their standalone life policies,  for  IHT /probate avoidance purposes. 

* I can't see you have ever mentioned your current employment status and whether you have death in service cover ( a multiple of your current salary ). If so, this would be in addition to your DC pension pot, and you should also have a suitable expression of wish letter in place covering those separate monies.

Hopefully you will continue to survive long after your daughter attains age 18. If so, you rip up this 'will trust' and establish a far simpler arrangement gifted direct to your daughter for her to deal with personally with the guidance of your ex. This will trust is just a stop gap arrangement until then.

 As for the life policy ( in trust for your ex) , is this permanent life cover payable whenever you may die or cover for a fixed term of years?  If merely term cover, you may need to think how else to benefit your ex in future, if/when policy expires with no value.