Advice on Estate Planning

daveeyes

I hope this is the correct forum for this thread...

My wife and I (both in good health and in our 60s) have 3 children each from previous marriages.  We are retired and live off small pensions and savings.

All children are adults and financially self supporting.

Our home is mortgage free and valued around £300k in in my wifes name.

We own a small flat (£115k) also mortgage free and in my name - we intend to sell that next year.

Our savings are around £100k

We currently have wills that leave everything to each other and then trust that, one first death, the surviving partner will adjust his/her will to leave everything to the 6 children.

Is this too simple?   We have spoken to a legal advisor who is recommending a discretionary trust be set up.

I would be grateful for any advice on this.

Thanks

FlorayG

Do you mean you want a will that simply says " I leave everything to my wife/husband"?
The problem with that is what if you both die at the same time in a car crash? You have to allow for you both dying at the same time. Apart from that, if you trust each other to 'do the right thing' then you don't have to make any trust to ensure the children get their fair share. Remember if the survivor changes their will, the deceased won't know and the survivor will be content with their new will so it's not something I would worry about anyway

BikingBud

FlorayG said:

Do you mean you want a will that simply says " I leave everything to my wife/husband"?
The problem with that is what if you both die at the same time in a car crash? You have to allow for you both dying at the same time. Apart from that, if you trust each other to 'do the right thing' then you don't have to make any trust to ensure the children get their fair share. Remember if the survivor changes their will, the deceased won't know and the survivor will be content with their new will so it's not something I would worry about anyway

But there is a risk that 3/6 or even potentially all children may be omitted.

daveeyes

Thanks - The wills would have a clause to say if we both die within a certain time frame then the gift passes to our 6 children in equal parts.

I suppose I really need an opinion on whether we need a discretionary trust in  our wills - it seems like a lot of bother and expense for a fairly small estate

poseidon1

daveeyes said:

I hope this is the correct forum for this thread...

My wife and I (both in good health and in our 60s) have 3 children each from previous marriages.  We are retired and live off small pensions and savings.

All children are adults and financially self supporting.

Our home is mortgage free and valued around £300k in in my wifes name.

We own a small flat (£115k) also mortgage free and in my name - we intend to sell that next year.

Our savings are around £100k

We currently have wills that leave everything to each other and then trust that, one first death, the surviving partner will adjust his/her will to leave everything to the 6 children.

Is this too simple?   We have spoken to a legal advisor who is recommending a discretionary trust be set up.

I would be grateful for any advice on this.

Thanks

Since this seems to be 2nd marriages for you both, did you both enter the relationship on an equal basis?

Regarding the property assets you mention,  the inference is  your wife had the more valuable of the two properties ( my interpretation of the fact it is in her sole name).

Would her preference be for that specific asset to ultimately pass to her own children on 2nd death? If so her will should provide for you to enjoy a life interest in the property on her death and then pass to her children to the exclusion of your own.

You may similarly wish to identify specific assets  the benefit of which your wife enjoys ( for life) if you die first and then pass to your own children. Neither of these trusts would be discretionary ( they are IPDIs ) , and  I really  cannot see any  necessity for the significant complications of discretionary trusts in your modest  circumstances, so that proposal should  be resisted.

What I will say is we  have seen a succession of blended family estate  matters raised on this forums, where the surviving children have felt very aggrieved at the eventual outcomes on 2nd death, where the perception is one set of children have been unfairly disadvantaged by the eventual split of the joint assets, especially where there was inequality in the financial contributions to the marriage by each parent.

So important both parents are exactly  on the same page with regard to their perception on how  each group of children should benefit on 2nd death. If equal shares, mutual life interest trusts should help achieve this, but ultimately reliance is placed on the surviving  spouse choosing  not to change their will to the detriment of the children of the deceased spouse .

Keep_pedalling

A discretionary trust is a terrible idea. A immediate post death interest trust on the other hand is probable advisable. 

madbadrob

Why not have wills that say i leave all i have to my wife/husband as long as they outlive me by 28 days ( this is required in law)  upon the death or should the wife husband predecease or die within 28 days leave all residue etc to be shared equally amongst the 6 children and then name each with addresses.

Make sure you both make it clear these are mutual wills and can only be changed if joth parties agree.  Id also get a solicitor to draw them up for added certainty.  I agree with pedalling there is no reason to mess with trusts here as the estate doesnt look like it will reach IHT thresholds if one was to pass today so the other would get both allowances hence 650k

Rob

comeandgo

Your scenario is similar to mine. Second marriage, both parties with 2 children.  Our wills leave everything to each other and last survivor is expected  to leave equally shared between all children though as we are in Scotland the death of a parent does allow the offspring a third share of moveable assets.  At that point the survivor will also give the same amount to their children to make things equal otherwise the partners children get two bites of the cherry.  A lot is left on trust that the survivor complies and if care is needed in later life there may not be much left anyway.

Keep_pedalling

madbadrob said:

Why not have wills that say i leave all i have to my wife/husband as long as they outlive me by 28 days ( this is required in law)  upon the death or should the wife husband predecease or die within 28 days leave all residue etc to be shared equally amongst the 6 children and then name each with addresses.

There is no law that forces you to include a survival clause in a will. 

Make sure you both make it clear these are mutual wills and can only be changed if joth parties agree.  Id also get a solicitor to draw them up for added certainty.  I agree with pedalling there is no reason to mess with trusts here as the estate doesnt look like it will reach IHT thresholds if one was to pass today so the other would get both allowances hence 650k

Rob

Mutual wills are a rarely made these days and for good reason, they are generally a terrible idea, people’s circumstances change and not being able to change a will when needed can be disastrous. For example, one spouse has a terminal illness and the other has dementia, so the spouse with the terminal illness can’t change their will to leave their estate directly to their children. 

The OP need to avoid discresionary trusts but an IPDI trust would probable be appropriate in this case as it protects both you children’s inheritance and the surviving spouse’s security. It is also tax efficient and unlike a DT does not come with a heavy burden on the trustees. 

The OP and his wife should make an appointment with a solicitor and preferably one who is a full STEP member.

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

EasySolution

madbadrob said:

Why not have wills that say i leave all i have to my wife/husband as long as they outlive me by 28 days ( this is required in law)  upon the death or should the wife husband predecease or die within 28 days leave all residue etc to be shared equally amongst the 6 children and then name each with addresses.

Make sure you both make it clear these are mutual wills and can only be changed if joth parties agree.  Id also get a solicitor to draw them up for added certainty.  I agree with pedalling there is no reason to mess with trusts here as the estate doesnt look like it will reach IHT thresholds if one was to pass today so the other would get both allowances hence 650k

Rob

In this case we are aware that the parties have estates of different values so including a survivorship clause could restrict the available tax allowances to everyone's detriment.

stuhse

Both in your 60s and in good health....

Make sure you consider all scenarios.

You might die tomorrow, your partner may live another 30 years....and have other partners who they write wills with (who they then die before)...who have children. (or vice versa)

If you leave your children nothing in your will...you risk that is exactly what they'll end up with.