When making a Will, it is common to plan to leave property or assets – in their entirety – to your beneficiaries. However, it may be more prudent in certain circumstances to leave your spouse or partner a life interest in your assets rather than giving them outright ownership. This can be particularly useful if you want to make sure your children receive something in the future. Steve Wright, from our Estates team, explores the options:
Possible problems in leaving assets outright
Married couples often make duplicate Wills, leaving everything to each other and then after both their deaths, to their children.
The problem here is that after the death of the first parent, unforeseen circumstances could mean that either the Will becomes invalid or the money in the estate is spent before it can be inherited.
For example, if the remaining parent remarries, any previous Will automatically becomes invalid. If the parent fails to make a new Will, their assets will pass under the Rules of Intestacy, with the majority of the estate going to the new spouse, who is then free to leave it elsewhere in their own Will. Even if they intend to honour an intention to pass the money to the children, it may be spent, for example on care home fees.
Similarly, if a new Will is written, any previous Will is superceded. This could mean that after the death of the first parent, the remaining parent is free to leave the whole estate elsewhere and not to the children.
Finally, if the remaining parent moves to a care home, then assets in the estate can be swallowed up in fees. As things currently stand the local authority will only step in to assist with payments when the patient’s total worth falls below £23,250.
How a life interest works
By leaving someone a life interest, you can be sure that your assets will ultimately pass to those you choose.
For example, you can leave your spouse a life interest in your home, which means they can live there as long as they want. Once they have died or left, your share will pass in accordance with your Will and cannot be given elsewhere. This also prevents your share being used to pay their care home fees.
You can also leave a life interest in other assets, including cash and shares. This allows your spouse access to money and interest for living expenses, but means that the money remaining after their death will go to your children, or whoever you have chosen.
To discuss any aspect of your estate planning please do get in touch.
Steve Wright, Operations Manager – Executor and Trustee email@example.com