There are many good reasons to make a Will and keep it updated, in contrast with your estate being distributed on ‘intestacy’ rules. For example: Guardians: You can appoint guardians…
PAUL KING TEP EXPLAINS:
The importance of making the right Will.
“Our Wills leave everything to each other, then the children.”
This is something we hear a lot at April King. Many couples make ‘Mirror Wills’ which first benefit their spouse or civil partner, then the kids. Unfortunately, this arrangement does not always play out as intended. When the first person dies, the survivor is left with all of the family’s assets. If they then need care, fall into debt or remarry, the whole of the estate is at risk. The children can end up with nothing – or worse still, someone else’s children can inherit!
The problems don’t end there. Even if none of those threats transpire, the family wealth can be lost when the children themselves inherit. If they fall into financial difficulty, divorce or have care needs of their own, everything you’ve saved for can quickly vanish.
April King’s Bloodline Wills aim to reduce some of these risks and to some extent, eliminate them. They can help ensure that everything you’ve worked so hard for actually benefits your children, their children and so on. For April King’s Bloodline Wills to work, it is essential that you own your home (and any other properties that you’d like to protect) as ‘Tenants in Common’ rather than ‘Joint Tenants’. This means that each of you own a separate share (for example, 50%) that you can deal with in your Will. If you currently own your home as Joint Tenants or one of you is the sole owner, we can change this for you. It’s important that you act now, as this sort of planning can only be done whilst you both have full mental capacity.
You can find out more about how Bloodline Wills work on this page. If you do have any questions, please don’t hesitate to reach out to myself or a member of my team.
Paul King is a full member of STEP, the global professional association for practitioners who specialise in family inheritance and succession planning. Full STEP members like Paul are internationally recognised as experts in their field, with proven qualifications and experience.
How Bloodline Wills work:
Step 1: Providing for the survivor
The key to protecting your assets is not to leave them directly to the survivor after the first death. Instead, the first-to-die’s share of the assets are placed in a trust. A trust is simply a way of managing assets (money, investments, land or buildings) for people. The trust will have trustees who manage the assets, and who must always act in the survivor’s best interests. The survivor will have use of the assets for life, but will never actually own them. With the trustees’ permission, the survivor can move house or sell an investment and replace it – but the ‘capital’ is safe.
If the survivor needs care and is not entitled to NHS Continuing Healthcare Funding, their own assets can be used to pay the care fees – down to the lower limit of £14,250 – but the assets in the trust cannot be taken into account or used. Similarly, if they fall into financial difficulty, the trust assets cannot be taken to satisfy their debts. Should the survivor remarry (putting their new spouse or civil partner first in line to inherit), the assets in the trust cannot pass sideways out of the family, benefiting someone else’s grandchildren.
Of note, it is possible to reserve a ‘power to appoint’ to the trustees, which means they would be allowed to pay out some of the assets to the survivor in an emergency.
“Where everything is left to the survivor, it is not uncommon for the the first-to-die’s share of the family wealth to be lost due to remarriage, care fees or financial difficulty. The Local Authority can take everything down to the last £14,250, which itself is often whittled away on extra charges. This can result in children or grandchildren losing some or all of their inheritance. Other potential problems include:
- Large and unnecessary inheritance tax bills
- Inheritance lost or dwindled away by beneficiaries
- Step children losing out entirely, depending on who dies first
All of the above risks can be mitigated or avoided altogether with a Bloodline Will.”
Book your free one-hour appointment, without obligation:
0800 788 0508 9am-8pm Mon-Fri 9am-5pm Sat
Step 2: Safeguarding the family bloodline
Once the survivor dies, the assets in the trust are pooled with the survivor’s remaining assets and can be distributed. However, again, leaving everything directly to the children or grandchildren exposes the inheritance to various risks such as care fees, creditors, remarriage or divorce.
One way to deal with this is to create further protective trusts for each beneficiary. The exact arrangement and choice of trust will depend on various factors, such as:
Tax: Each type of trust is treated differently for Inheritance and Capital Gains tax purposes. For example, some types of trust offer the significant benefit of being highly flexible. However, these can be subject to ongoing 10 year anniversary charges (max. 6%) and proportionate exit charges when the assets leave the trust, unless they are loaned to the beneficiary.
Risk factors in your family: If your children have risk factors – a poor record of managing finances or an unstable marriage for example – safeguarding their money in an appropriate trust can reduce the likelihood that it will be squandered or lost to a divorce settlement. Using a flexible type of trust in these circumstances may take priority over the possibility of an Inheritance Tax charge. Consider also that whilst these factors might not exist when you write your Will, they may develop down the line.
Type of beneficiary and age they should inherit: Some of our clients have minor children and grandchildren, and may therefore want to use one of the various trusts that benefits from special Inheritance Tax treatment for these beneficiaries. The Residence Nil Rate Band allowance will still be available where some of these trusts are used.
At April King, our lawyers will look at your individual family circumstances and explain which options would be most suitable for you.
April King Legal offers:
A free information pack about Wills and Lasting Powers of Attorney.
A free one-hour appointment to discuss your Will, without obligation.
Individual bespoke advice based on your personal circumstances and goals.
Smart ways to pass what you’ve worked so hard for down your bloodline.
Highly competitive fees, and home visits at no extra charge.*
Firm run by a STEP-qualified lawyer and regulated lawyer-managed process.
If, after you’ve met our advisor, you’re not convinced that our advice is right for you, simply walk away. There’s no obligation whatsoever to proceed.
Book your free one-hour appointment, without obligation – call 0800 788 0508
9am-8pm Mon-Fri 9am-5pm Sat
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Why choose April King Legal?
- We are a Legal 500 firm, a standing which recognises that we have very strong technical ability available for the most complex and innovative work.
- We employ a mix of Solicitors, Chartered Legal Executives, TEPs and other specialist lawyers to deliver you an excellent service tailored to your needs.
- We are led by Paul King, a STEP-qualified Trusts and Estates Practitioner. Full STEP members like Paul, known as TEPs, are internationally recognised as experts in their field, with proven qualifications and experience. Paul is also a member of the Leaders Council of Great Britain and Northern Ireland which brings together the most influential figures from across the country.
- Over the past almost 30 years we have advised thousands of clients from all walks of life, specialising in Wills that preserve more of your assets for future generations.
- We were featured in the 2019 Parliamentary Review for the Law and Justice sector as a best practice representative.
- Our head office is in Nottingham and we assist clients at locations throughout England and Wales.
- We provide home visits at no extra charge where feasible. We also have a number of locations where you can visit us, for your convenience. Otherwise we offer a range of technology for your meeting, to suit you.
Guides and FAQs
From the blog:
Not all propery passes according to your Will! In this article we explain which property passes under your Will, and which passes regardless of what your Will says.
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