As is most often the case, married couples, those in a civil partnership and even those who are cohabiting will want to make sure that their spouse or partner is protected and taken care of if they were to die. This will be a priority for them and often the motivation behind writing a Will.
Mirror Wills
In most cases, couples will make what are known as mirror Wills. They each write a Will independently, however, the terms mirror the other Will. This means that the outcome will be the same regardless of who is to die first or last and that ultimately the same people will inherit in the end. However, what is not often thought about is that the survivor can revoke or cancel their Will and make a new Will in the future, which may leave everything to an entirely different set of people. Now I hear you, you won't be here anymore so it's not of a concern, right? However, it might be of concern to your children or family members who could find themselves cut out in favour of a new partner or spouse for example.
Picture the scene, Fred and Wilma are happily married with two children and Fred has a child from his first marriage. They have written mirror Wills which leaves everything to each other in the first instance and then equally between the three children. Fred sadly dies and Wilma inherits Fred's entire estate. Wilma updates her Will. She decides that she no longer wants Fred's child to inherit and so leaves everything to her own two children. This means that Fred's child has been cut out and this isn't what Fred had wanted or intended when he'd left all of his estate to Wilma.
Sideways Disinheritance
Nobody knows with any certainty what the future has in store for us. With the UK population living longer than before it is no surprise to see that people will often remarry after being widowed and potentially go on to have another very long and happy marriage with their new spouse. It's not to say that they don't love their deceased partner, it's more to do with not wanting to be lonely for the rest of their lives and most of us would want this for our partner if we were to die first. We would want them to move on and find happiness again. But with this newfound love and happiness can bring family trauma and disputes.
Let's talk about Fred and Wilma again. Now imagine this time after Fred passes away, Wilma meets Barney, they fall in love and choose to marry. Barney might have children from previous relationships and Wilma and Barney could go on to have children together. Wilma and Barney write mirror Wills, which again leaves everything to each other and then they leave everything to Barney's children and the child they have together. Not only does Fred's child miss out but also Wilma and Fred's shared children and Fred's wealth will ultimately end up with Barney's children. This is sadly a scenario we often encounter and actually a carefully written Will can safeguard against this.
Divorce, Insolvency, Care Fees
A similar situation arises if the surviving spouse were to later marry and subsequently divorce, or if they were insolvent and filed for bankruptcy or entered long-term care which needed to be funded. The inheritance received from the spouse would be in jeopardy as this would be taken into account and potentially lost, again resulting in those you would have wanted to benefit to miss out.
But how can you protect your partner or spouse whilst also protecting your children or other relatives?
Here's how:
Mutual Wills
In UK law, a mutual will is a type of will made by two or more individuals, typically spouses or partners, which contains an agreement between the parties to dispose of their assets in a specific manner. Unlike individual wills, mutual wills involve a contractual understanding between the parties, usually not to revoke or amend the terms of the will without the other party's consent. Mutual wills are often used by couples who wish to ensure that their assets are distributed according to a predetermined plan, typically to benefit their children or other beneficiaries, and to provide financial security for the surviving spouse or partner. Above all, mutual Wills are generally not advisable. In making mutual wills, you are effectively giving away your right of testamentary freedom as you cannot update your will in the future without the other's consent, which cannot be obtained if one of them has died. These types of Wills are fraught with difficulties and can often lead to difficulties for the surviving spouse and family disputes can arise.
Will Trusts - Protective Property Trusts
Very often, the family home is the largest asset and whilst you would want to ensure that your spouse or partner has a roof over their head for the rest of their life, you are bound to want to ensure that your house is ultimately inherited by your children or other family members, without this being lost in the scenarios we have highlighted in this blog. A Protective Property Trust is a legal arrangement established within a will to protect the value of your property, for the benefit of specified beneficiaries, often family members such as children or grandchildren. This type of trust is commonly used in estate planning to safeguard assets and ensure that they are distributed according to your wishes while providing protection against potential risks such as remarriage, creditors, divorce, or care home fees. Your spouse continues to have the right to live in your property for the remainder of their life and following their death, your share of your property will pass to your chosen beneficiaries as stipulated in your Will. It is also possible to end the Trust in the event of your surviving spouse or partner cohabiting, remarrying or going into longterm care.
Let's look at Fred and Wilma again, let's this time assume that in their mirror Wills, Fred and Wilma created a Protective Property Trusts. When Fred passes away, Wilma is free to continue living in the home for the rest of her life. If she then starts to cohabit with Barney or marries him, then the Trust comes to an end and Fred's children will at that point inherit Fred's 50% of the property. If Wilma were to go into long-term care, then the local authority will only make an assessment against her 50% of the property, Fred's 50% is effectively ringfenced for his children.
This type of estate planning is very common and can be a very valuable tool for individuals who wish to safeguard assets for the benefit of their loved ones whilst mitigating the risks and uncertainties as outlined here. It's a good idea to talk this through with an experienced and qualified Estate Planner such as Toucan Law, who can talk you through all of the pros and highlight any cons.
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