15 Jun 2022

Wills & Probate

Estate planning tips for modern families

These days, the ‘traditional’ family where a man and woman get married, have 2.4 children, who then grow up to live locally with their own spouse and children is clearly far less common than it was a generation ago. And yet, when it comes to planning what will happen to your estate after your days, the legislation is still largely geared to a ‘traditional family’ set-up, leaving it more complicated for blended families - where couples have children from other relationships - and same-sex couples to know what to consider when estate planning. Associate solicitor in our Wills & Probate department, Afonwy Howell-Pryce, shares her top tips.

In today’s wonderfully diverse society, families come in all shapes and sizes and no longer fit into a ‘one-size-fits-all’ mould. Different families may consist of cohabiting partners, same-sex couples, adopted children, children from previous relationships and dependants living across the globe, as well as a blend of different cultures.

STEP (the Society of Trust and Estate Practitioners) recently conducted a survey of its members called ‘Meeting the needs of modern families’. It found that 97% of advisors have helped a blended family with their estate planning and that an increasing number are requesting support from professionals. This is hardly surprising as many will have more complex needs and will require professional help when navigating the intricate world of inheritance tax and Trusts. Estate planning can be complicated enough, but when it comes to blended families, the issue becomes critical since current spouses and children from a previous marriage need to be protected.

Not only are the financial issues of blended families more complex, but the emotional issues around those decisions can often be much more intense, especially when dealing with the competing interests of your own children, stepchildren, and a new spouse. When a parent passes away or becomes incapacitated, there’s potential for conflict between the surviving spouse and children and one or all of the parties may feel left out. Avoiding conflict and mitigating the risk of contentious claims during probate should therefore be a key consideration for blended families. 

Why is it important to get a robust plan in place for what happens after you die?

While none of us like to think about what might happen after our days, it is useful to identify different scenarios to understand why estate planning is so important. For example, a widow who has children from her first marriage might well re-marry. She feels that she can rely on her new husband to “do the right thing”, and they keep things simple by planning to leave their estates to one another. She feels safe in the knowledge he will then leave a share of the residual estate to her children from her original marriage.

However, after the widow’s death, the new husband goes on to remarry and over time loses contact with the children of his former wife. He is then influenced by his current spouse to leave the estate that he has inherited to her, and consequently the children from the former marriage don’t inherit from their mother’s estate. 

Helpful tips

So, with this in mind, what can blended families do to make sure they get the best advice about planning for the future?  Here are our top tips:

Tip 1 – Instruct a properly qualified solicitor who specialises in this area of the law. Ideally, you should make sure they have additional accreditation from STEP (the Society of Trust and Estate Practitioners). The key to minimising potential issues is a well-thought-out plan where you specify exactly what you want to happen to your estate, so always make sure you get professional legal advice.

Tip 2 – Take the time to explain the exact dynamics of your family to your solicitor. Drawing out a family tree can be helpful. Make sure you don’t leave anyone out, such as estranged family members. Your solicitor should make you aware of any potential pitfalls and claims that could be made as a result of not providing for particular individuals in their family under the Inheritance (Provision for Family and Dependants) Act 1975.

Tip 3 – Your solicitor should run through a variety of different scenarios to make sure you understand all the potential outcomes of your estate planning decisions. You should expect your solicitor to challenge you on your instructions to ensure you fully understand them and their consequences, and explain other options you might consider. 

Tip 4 – It is important to understand that if you die without making a Will, your assets will be shared according to the laws of intestacy. These strict rules mean that your assets pass to your immediate family – your spouse, children, siblings and so on – but, importantly, not to any step-children you may have.

At this point the situation can be very difficult for all concerned as although it’s possible to challenge intestacy, it can make for a very strained period. Without a Will, your spouse is likely to be your main beneficiary so your children could receive significantly less or, depending upon the value of your estate, even nothing. In this scenario, your stepchildren would then be in line to inherit your new spouse’s estate when they die.

Tip 5 – If you are re-marrying and have children from a past relationship, it’s vital that you are open with your new spouse or partner and take time to discuss some of the potential pitfalls of simply leaving your estates to one another (referred to as ‘mirror’ Wills).

For example, if you leave your estate to one another, complete control over beneficiaries can be lost. There are several things to consider here. If the surviving spouse is declared bankrupt, all the estate of the first to die is lost. And if the surviving spouse, who has remarried, then divorces – even where the agreement has been to benefit children from a former marriage and their Will supports this – a subsequent divorce could mean all or some of those assets could be lost in any settlement. Setting up a trust can eliminate a lot of these worries.

Tip 6 – If you have re-married and have children from a previous relationship, think about placing some or all of your money in a trust that your spouse can use during his or her lifetime. Then when your spouse passes away, everything in that trust can go to your children.  This should avoid any family conflict between your spouse and your children who may have competing goals. However, it is important to make sure the financial aspects of the survivor are taken into account when considering this type of trust.

Tip 7 – Although the legal Probate process is the same for both same-sex and opposite-sex couples, same-sex couples are statistically more likely to cohabit without any legal recognition of their relationship, which can have a significant bearing on how the Probate process works and on their entitlement to inherit from their deceased partner’s Estate.

In England and Wales, the Rules of Intestacy do not provide for unmarried cohabiting partners – either in same or opposite-sex couples – meaning they would be entitled to inherit nothing. Also, under current Inheritance Tax regulations, while any assets that pass between spouses or civil partners will be exempt from Inheritance Tax (providing that both partners are domiciled in the UK), the same exemption does not apply to cohabiting partners.

Tip 8 – If you are in a same-sex couple and have children, your Will has to be drafted very carefully to ensure any gifts you leave to those children are distributed correctly after your days.

Under the common law, the mother of a child is defined as the woman who carries the child, while the second parent is considered the genetic father. As such, if one party in a same sex couple has parented a child with somebody of the opposite sex, the same-sex partner (whether they are in a civil partnership, married or cohabiting) will not be considered the child’s parent.

In this situation, Wills for the couple would need to be carefully drafted to ensure that the child of the couple would be able to inherit from both parties.

There are different rules depending on whether a child has been adopted by the partner of the biological parent, whether he or she was conceived through fertility treatment or surrogacy, so it is imperative that all same-sex couples with children have their Wills drafted by professionals to ensure that no complications arise.

Tip 9 – Whatever your family’s unique circumstances, always talk to them about your wishes. This way, you can discuss any potential conflicts prior to making your Will and avoid any unwelcome surprises later down the line. It’s always better to have these conversations with everyone now, rather than after death, when it’s too late and emotions can play a significant part in any discussions.

Get in touch

If you would like to talk to one of our friendly, specialist team at Harding Evans about estate planning, we have years of experience and can talk you through the whole process. Get in contact with us at hello@hevans.com or call us on 01633 244233 or 029 2267 6818.

 

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