Paul King TEP explains why, if you have a Mirror Will, you need to get it changed, now.
What is a Mirror Will?
Mirror Wills are simply identical Wills that a couple make, leaving everything to each other.
For example, Mrs Smith’s Will might specify: ‘
I give everything to my husband on death, but if he dies before me it goes to my children.’
Mr Smith’s Will would then say:
‘I give everything to my wife on death, but if she dies before me it goes to my children.’
However, what most people don’t anticipate is that if you leave everything to your partner in a Mirror Will and they then need care in later life, the Local Authority is likely to take most of the assets you have worked so hard to build up together.
Even if your partner does not need care, a Mirror Will won’t guarantee that your children or grandchildren will receive any of your assets. In fact, your estate can pass sideways outside of your family if your spouse remarries, or one of your children gets divorced or has financial difficulties.
Assets used up by care fees
The Community Care Act, which came into force in April 1993, gives Local Authority the power to use peoples’ finances and assets towards the cost of their care. If a person’s total assets (including the value of their home) amount to more than £23,250 (£26,250 in Scotland or £24,000 in Wales), the Local Authority will expect them to pay for their care fees in full. On average, it costs £572 a week for a care home and £775 for nursing care, so their life savings can be used up very quickly.
Once their assets deplete to the £23,250 limit, the Local Authority will contribute partly to the cost of their care, but they will be expected to continue paying until their assets are reduced to £14,250. At this point, the Local Authority will take over the payments.
If you leave all of your estate to your partner, both your share and their share of the assets will be used for care fees.
Assets passing sideways
Another risk to your hard-earned assets is the possibility of your estate passing sideways outside of the family. Most people are shocked to hear that rather than their children or grandchildren inheriting, their estate could go to their child’s ex-spouse, debt collectors or somebody else’s grandchildren.
Avoiding the problems caused by Mirror Wills
There is a simple solution that allows you to prevent your partner having to spend your share of the estate on their care fees, or to stop it passing sideways outside of the family. The solution is to leave everything to your children on the death of your partner, using a Trust Will. This means that your partner can stay in the family home until their death, after which your children, grandchildren or whoever you choose will inherit your share of the estate. Your share is safe and will pass on to your choice of beneficiaries, regardless of whether your partner remarries or has to go into care.
This solution requires that you hold your home as Tenants in Common rather than Joint Tenants.
Joint tenancy vs tenants in common
If you currently hold your home as ‘Joint Tenants’, both you and your partner own a 100% indivisible share. If you die first, your partner continues to own 100% of the property – or if they die first, you continue to own 100% of the property.
If, on the other hand, you hold the property as ‘Tenants in Common in equal shares’, you each own 50% of the property, and you can leave your share to whoever you choose. By specifying that your share will go to your children and/or grandchildren on your partner’s death, your partner can remain in the property until they die but will not actually own the share. It cannot therefore be taken by the Local Authority for their care fees, or be passed on to someone other than who you have chosen.
If you currently hold your home as ‘Joint Tenants’, my team can arrange for this to be changed to ‘Tenants in Common’.
On the second death, a further option is to place the entire estate into a bloodline trust. This offers further protection if one of your beneficiaries divorces or gets into financial trouble.
A free one-hour appointment in your home
You can see one of my team of Solicitors, Chartered Legal Executives and specialist Trusts and Estates Lawyers in the comfort of your own home. We have a limited number of free one-hour appointments available, without obligation. Please do give the team a call 0800 788 0500 or email email@example.com.
I look forward to working with you.
Paul King TEP
Paul King is a STEP-qualified Trusts and Estates Practitioner. STEP is the global professional association for practitioners who specialise in family inheritance and succession planning. STEP members help families plan for their futures, from drafting a will to advising on complex issues relating to inheritance and protecting the family assets. Full STEP members like Paul, known as TEPs, are internationally recognised as experts in their field, with proven qualifications and experience.
Mirror Wills – FAQs
Q: How can I find out if we hold our home as a ‘joint tenants’ or ‘tenant in commons’?
We can find out for you with a simple, quick check – just get in touch.
Q: What about assets other than my home?
You can put most types of assets into the Trust – including cash, investments and any other property you own. If, for example, you put investments in the Trust, your partner could benefit from these during their lifetime and then your children or grandchildren could inherit them after that.
Q: What if my partner wants to move home after my death?
Your partner will be able to move home if they want to, with the permission of trustees that you have chosen.
Q: Can we each choose someone different to ultimately inherit our assets?
Yes! You might decide, for example, that you want your partner to benefit from your home and assets for life, and then your children inherit afterwards. Your partner might instead choose to allow you to benefit for life, and then your grandchildren inherit afterwards. You are both completely free to choose who ultimately inherits your respective shares of the family home and your other assets.
Q: But I’ve already made a ‘Mirror Will’ with another firm!
That’s okay. Lots of our clients come to us having made Mirror Wills with another firm. We can contact the previous firm for you to arrange for the return of your current Will, and set up the new Will to replace it.
If you haven’t already received our free information pack, order yours below.
We also have a limited number of one hour free appointment without obligation to discuss your Mirror Will. Get in touch with our team on 0800 788 0500 or email firstname.lastname@example.org.