Death can come unexpectedly and without warning. With COVID-19 still ravaging the globe, the odds of an untimely demise are perhaps the highest we’ve ever known. It’s easy to see the prudence in laying out a plan for end-of-life affairs.
There’s a lot to consider. We want our family to be comfortable — with their lifestyle and future provided for. While it may seem like there’s little need to worry, it’s unfortunately easy for things to go awry.
So how do you ensure that your estate makes it to those you wish it to when you no longer have any control over the situation? The answer may lie in a life interest Will trust.
The Issues With Wills
What’s wrong with a simple Will? Well, nothing, but it does have its weaknesses.
One of the simplest and most common types of Will is a simple mirror Will. Under this arrangement, your entire estate transfers wholly to your spouse (or civil partner, or whoever you designate). Then, upon their passing, the estate is distributed to your children according to the terms in the Will. Your spouse, then, usually has a similar Will, where their estate would transfer to you, should they pass first.
There are a couple of risks with this. First, your spouse can spend it. The surviving spouse might need care in a residential home or care home. Care fees can rapidly consume the value of your estate. The government will step in eventually and begin to cover costs, but your children could end up with as little as £23,250 between them — no doubt a paltry sum compared to the value of your property!
The other risk to consider is rather uglier, but it happens. It’s called the “sideways disinheritance trap,” and it has to do with the fact that if your spouse remarries, they can draft a new will. . If the Wills you had were simple mirror Wills, and they die before their new spouse, your estate would pass to the new spouse and thereafter their children. , Your children could end up with none of your estate. We’d like to think that people have kinder hearts than this, but it happens often enough to so many people, therefore you have to protect your own estate for your children.
How a Life Interest Will Trust Is Different
This kind of Will is very important for you because you control who receives your estate and when. Your spouse receives what is called life interest, allowing them to continue living in the house while still having control over their share of its value. They could even sell the house and downsize if necessary. The share of the first to die is always protected.
Furthermore, under a life interest Will trust, your spouse is entitled to any income made from the property, whether that be from renting it out or investments if they are included in the trust.. This income can help cover the costs of a care facility should the surviving spouse’s health fail.
Ultimately, a life interest Will trust protects your estate from it ending up belonging to children who are not your own.
The Downside to a Life Interest Will Trust
The most common issue with a life interest Will trust is resentment on the part of the new spouse who is prevented from giving the share of the estate of the first one to die to their own children who shouldn’t get it in any event.
The law allows the surviving spouse to make a claim against the estate of the spouse who has died. It does not protect the estate of the spouse who died first. For example, Amanda and Brendon are married with three children. Amanda dies first and Brendon remarries Susan. The law says that Brendon has to provide for the spouse at the date of his death. Therefore, if he leaves a simple Will with Susan as his sole beneficiary, his children from the first marriage may get nothing unless she enters into a deed of variation giving some of her late husband’s estate to his children.
The other alternative that Brendon has is to have a mutual Will with Susan where she agrees to give part of his estate to his children on her death. Brendon’s children probably have to take Susan’s estate to court if she doesn’t honour Brendon’s mutual Will. This is expensive and time consuming.
A life interest Will trust protects Amanda’s share of the estate that she had with Brendon. Susan wouldn’t be able to sell the property because there would be a restriction stopping her from doing so without the children’s consent. This gives them control of their inheritance.
Having a Will In Place is Important
Elizabeth Middleton Solicitors offers the legal expertise you need to plan for the future and protect your assets. We understand that everyone’s circumstances are different and our friendly and approachable legal team works to develop Wills, lasting powers of attorney, and tax and estate planning suited to your unique needs.
Contact us today to learn how our services can help you and your family prepare for the future and protect your estate.