Would you like to leave what you own to your partner in first instance, and upon their death ensure your assets go to your children?
This may sound like a sensible choice for someone who is married-with-kids. Unfortunately, it is not possible with a simple Will. If you don’t plan for it, your money may end up with 3rd parties and not your children.
Imagine this scenario: you die, your widowed partner remarries, and then they die too. Unless your spouse had the foresight to change their Will AFTER their re-marriage, the assets you left her principally go to her surviving partner – and NOT your kids.
This marriage-after-death is typically called MAD risk for short. Do you want to avoid this?
I believe most of us want what is best for our children. But intentions and promises are not enough. Especially if your partner re-marries, where the act of marrying automatically ‘voids’ any Wills signed whilst you are alive (ie even if they didn’t realise this).
If you want your assets to be useable by your partner while they are alive, and THEN go to your children, you will need a Trust.
There are many types of Trust, and the law is not straightforward. But using a Trust can be very simple, whilst giving you good control over your assets and how they are distributed. In this case, an asset protection trust can allow your partner to use the assets (say, to fund the family home), before transferring to your children at the appropriate time.
An asset protection Trust doesn’t just prevent MAD risk. If you die and your widowed partner is hit by care fees, the Local Authority cannot force them to spend your money on care. It can even help avoid double-taxation as wealth is passed through generations.
You can direct assets to a Trust that benefits your children (and in time their children) but with a provision that your partner can stay in the family home. This is commonly used where there are children from a prior marriage.
MAD not to.
A Will is a moment-in-time document, which is relevant to circumstances at the point of death. A Trust is a continuing instruction of your wishes – with protection against MAD, should your own children divorce (do you want their ex to get your money?) and hefty inheritance tax bills.
At Kinherit we believe everyone should know and understand their options so they can make informed decisions and best protect their family.
We have made Trusts simple to use and highly cost-effective. While they may not be suitable for everyone, a Trust could save your family hundreds of thousands of pounds on common occurrences such as divorce.
With this in mind, a Trust is potentially the best investment you can make for your children.