2nd relationships & making wills

princessposh

Hi
oes anyone have any sensible advice on second relationships and making wills? I've been with my partner for 4 years - we now want to make wills to include making provision for each other in the event of either death. We want to be fair to each other and our children from previous relationships ( 1 & 2 respectively) but not keen to give any money until we have both died!
Here;s the basics
1. Each have own homes mine rented out. Live in hishouse. Both mortgaged
2. He has two rented properties
3. Both have pensions & life insurances ( mine via work and his ork & policy until aged 60)

This is what we'd like

1. provide surviving partner an income from 2 rented properties until event of 2nd death - then assets returned to respective children. Can surviving partner sell rented houses?
2.Can we will joint assets to each other?

Any advice greatfully accepted!

localhero

Hi Princessposh,

It is important that you do both make wills, as there is no automatic right for either of you to inherit from each other's estate otherwise.

You can both set things up so that the surviving partner is able to benefit from the other, whilst ensuring that your respective children ultimately receive your estates.

As it would appear you are not married to each other, there is no doubling up of the IHT threshold that married couples are entitled to - a potential disadvantage.

A way round this is if you're not inclined to get married, is to each leave the maximum possible into a discretionary trust written into your wills (currently £312,000), which would allow the survivor to borrow the assets against a promise to repay them when they die.

This will allow you to maximise your IHT allowances and leave a combined estate of up to £624,000 free of IHT.

The trustees are generally given a lot of freedom and can allow the survivor to move or downsize.

For this to work you must own any property as tenants in common rather than as joint tenants. It can be changed quite easily, but if it isn't then any property owned as joint tenants will pass automatically to the other co-owner irrespective of what the Will says.

A competent willwriter will be able to sort out all of that for you, though do choose carefully as fees and competency will vary enormously.

Visit the Institute of Professional Willwriters website at www.ipw.org.uk to find a competent professional in your area who will visit you at home and provide details of all their fees in advance.

Pension and life policies will generally pass outside of the Will, but it is important you tell the schemes' trustees who your nominated beneficiaries are. Have them written into trust and the proceeds will pass directly to your appointed beneficiary(s) outside of the probate process (and escape a 40% IHT liability).

Mrs_P_Pincher

Localhero is pretty much there Coming at it from different angles, I would usually say to talk to a solicitor. However, I've looked at the IWW website and it looks pretty good. Just be aware that anyone can buy a will writing franchise and go on the training course - make sure you are getting the advice you need from someone who is properly qualified to give it.

We made our wills a couple of years ago after we got married through a local solicitor and have done them in such a way that I have a home until I die or remarry and when I can't manage the stairs I can move to a flat on the same terms. I put 10% into his house when we refurbished it, so on the second death my kids will get that 10% back between them and his will get 90%.

It was a nightmare figuring it all out and finding a way to be fair to everyone, but money well spent in the end.

Good luck

Mrs PP

localhero

Hi Mrs P Pincher,

Thank you for taking the time to visit the IPW website.

I would like to make clear, that every member of the IPW must pass an entrance exam, which is marked by independent assessors, obtain professional Indemnity Insurance and complete ongoing professional training each year.

The Office of Fair Trading have also given Stage 1 approval to the Code of Conduct in place - which it is hoped, will be the first step towards much needed regulation in the willwriting profession.

Unfortunately less than a quarter of Willwriters bother to subscribe to the IPW's very high standards and join, and as you rightly say, anybody can set up a business and call themselves a willwriter.

It is also worth noting, that solicitors do not have to compulsorily pass any exams in willwriting and whilst some are very good, most aren't.

Mrs_P_Pincher

Hi LocalH - Standing as I do rather in the other camp, I was favourably impressed by the IPW website and the requirements for membership. I hope the Institute is able to raise its profile sufficiently to limit the activities of the 75% who don;t bother to get the qualifications and join. I also take your point about solicitors - obviously you wouldn't expect the guy that did your divorce, or your PI claim to write a potentially complicated Will - it pays to ask around.

I still say the OP needs the make sure she is getting the advice she needs from someone who is properly qualified to give it. Would you agree?

Mrs PP

localhero

Hi Mrs P Pincher,

Whilst the IPW have made enormous strides in raising the profile of the IPW, the biggest problem is that membership of the IPW is entirely voluntary and most Willwriters choose not to subject themselves to the rigours of IPW membership and either join other organisations which offer them an easier life or not bother at all.

The Government are of the opinion that mandatory regulation will drive some providers out of the market place and reduce consumer choice - which will be a bad thing.

The IPW says that the only people who will be driven out will be those that can't, or won't submit themselves to tests of competence and delivery of the highest customer service - and that has to be a good thing.

Until it is mandatory for all willwriters to submit themselves to the type of tests and standards that the IPW has always required of all its members, consumers will continue to be at risk of paying good money for faulty products from untrained providers.

Unfortunately, unlike most products, the legal and technical nature of wills means that customers have difficulty finding faults in their Wills. Faults in Wills usually come to light after death - when it's too late to correct them.

Mrs_P_Pincher wrote:

I still say the OP needs the make sure she is getting the advice she needs from someone who is properly qualified to give it. Would you agree?

I couldn't agree with you more. Unfortunately it is still a huge lottery and I find that wholly unacceptable. So will the countless others who have lost out to a badly drafted will at the hands of so called willwriting professionals - solicitors included.

margaretclare

As I understand it, the answer to question 2 in post #1 is: no need to leave joint property to each other, because anything owned jointly - a property, a joint bank account - passes automatically 100% to the survivor.

It is worth remembering also that any children must be named, not just written as 'my children' or 'said children'. This makes sure that the right children get to inherit - this has been the problem in the other thread that sloughflint quoted. Also what is to happen if one of the beneficiaries dies leaving issue - does his/her share go back into the 'pot' to add to the others' share, or does it pass to his/her child/ren?

HTH

localhero

Margaretclare,

There are many issues to deal with here. Where you have an unmarried couple with children from previous relationships particular care is required.

Leaving your estate to your new partner means that there is no certainty that your own children will ultimately inherit your estate in the way you might have desired.

Therefore in this situation it would be advisable to own property as tenants in common, so that you can determine its ultimate destination.

There are a number of ways to achieve this without disadvantaging the surviving partner. One is for them to be given a life interest in the property - ie they can live in the property or receive the income from the estate until they die and then it passes to A & B etc, or alternatively setting up a discretionary trust.

I am not privy to all the facts, but the suggestion I made is likely to be the most tax efficient in respect of inheritance tax.

In any case the OP and her partner would be very wise to employ the services of a competent willwriting professional, who can advise on the pros and cons of various courses of action depending on their exact circumstances to arrive at a practical solution that meets the needs of all concerned in the current circumstances.

princessposh

Thanks for the advice....most appreciated.
Just another question
If we were to put our respective houses in trust for each other to have a life time income from, do we need to own all the houses as tenant in common or can we leave ownership as they are?. Both houses are currently being rented out.
If so is there any tax implications for the surviving partner i.e income from rental house taxable, can the surviving partner offset rental expenses to reduce tax liability, Who's liable for

Also on another note my partner is possibly being made redundant this year - hsi pension will be frozen. I'm concerned about death/ survivor benefits - am i entitled?

Has nayone got any idea how much the will writing body ( as mentioned in earlier response) charge. I've been offered a half price offer to write our wills via the will writing service (approx £40 each) are these members of the same organisation?
Thanks again

Posh

butterflylady

Hi Princessposh,

I'm afraid that I can't help with the legal side of your will. The advice I would give is to explain whats happening to all of the children involved so that no one has a shock when the worse happens.

My mum was in your situation together her and my step dad decided onwhat they wanted, had a will drawn up and then told myself and my step brothers the main points in regards to thier house and the share my step father still owns in his first wife's house.

It gave my mum a chance to explain why they had made certain decisions and me a chance to give an opinion on them.

As a family this has worked really well for us and I know it is one less thing to worry about when the worse happens.

Butterfly

xxx

localhero

Hi Princessposh,

Where you have a desire to leave assets into trust, changing the ownership to tenants in common is necessary where you jointly own assets as joint tenants. Otherwise they will pass automatically to the other co-owner rather than pass in accordance with your Will.

Where the asset is already solely owned by you, no further action is required with regard to its ownership.

Whatever type of trust you opt for in your Will - and the appropriate type will depend on your circumstances - it will be the trustees' job to submit returns to Revenue & Customs and to pay any taxes where due. The tax payable on investments can be offset by expenses in the usual way. Tax issues can be quite complicated where there is a trust, and so professional advice may be required.

The Institute of Professional Willwriters is a nationwide organisation of over 250 members and fees will vary from firm to firm. The Wills that you and your partner require will not be standard mirror Wills and so will not come cheap. That said, the services of an IPW member will be a lot cheaper than a solicitor and comes with the guarantee that the member will be properly qualified, regulated and insured.

The firm that you mention is not a member, nor a member of any other willwriting organisation. The fees that you have been quoted will in any case be for the most basic Wills. A decent willwriting firm will advise you of all of its fees in advance, so that you are not met with any unpleasant surprises.

I can't help with the pension question I'm afraid, but the scheme's trustees will be best placed to answer that particular question.