Deciding on a will: Is there a way to include our child as a beneficiary and safeguard the gaming inheritance?
My husband and I are currently updating our wills.
It is our second marriage and we have five children between us.
We have been married for over 20 years and that is why we are very happy to have mirror wills in which, upon the death of one of us, the spouse receives the estate and the estate is subsequently divided into five equal parts between the children. We have accumulated a decent amount of money.
One of our children has some bouts of depression and anxiety and sometimes irrational behavior.
They have threatened suicide in the past.
They feel undervalued and have very little self-confidence. They also have a game theme and an IVA (Individual Voluntary Agreement).
They are very hardworking but have always had temporary jobs with minimum wage. Heritage could really help them gain some positivity and not feel like they are ever good enough.
Is there a way to include them as beneficiaries and safeguard the game’s heritage? I know that if we didn’t include them in the will, this would definitely trigger a very serious mental health episode.
Due to their past behavior we have a very limited connection and they feel outside of the family unit.
We don’t want to exclude them, but is there a way to protect the inheritance from being lost and safeguard them from rejection? I would appreciate any help.
This is Money’s Tanya Jefferies responds: It’s understandable to want to treat all your children equally, but also take some precautions if one is unreliable with money.
We asked a lawyer to explain how you can divide your estate fairly between them, but leave the decisions about when and how much money is paid to each sibling in the hands of people you have chosen and trust to understand your wishes and concerns.
When it comes to mirror wills, there are risks that you may be comfortable with as a couple, but which she explains for the benefit of readers who may be unaware of the potential dangers.
Diva Shah, senior associate in the private client team at law firm Kingsley Napley, responds: It is not uncommon for parents to worry about protecting the assets they leave behind.
Misadventures and divorce are usually the main reasons. While you can’t take your money with you, you can control (to some extent) who has access to the funds and when from beyond your grave.
The most commonly used structure within a will to achieve some form of control after death is called a discretionary trust.
Diva Shah: Trustees can make decisions on an individual basis for each child taking into account their needs and circumstances.
The discretionary trust acts as a vehicle through which chosen trustees (often executors named in your will) control the assets of your chosen beneficiaries. The beneficiaries would be your children, grandchildren and any other person or charity.
The trustees have the ability to pay capital or income to the beneficiaries as they see fit. There are no defined actions as to who inherits from the trust, as this is based solely on the discretion of the trustee.
However, in theory, the trust can be held in equal shares for the children, so in this case, one-fifth for each child.
Trustees are guided by your Letter of Wishes, which sets out your wishes about the trust and protection, including the circumstances in which you would like the funds to be available or not.
This could include desires to make funds available for property purchases, education or medical expenses, but withhold funds if there are concerns about divorce, financial immaturity or mental health.
Essentially, trustees can make decisions on an individual basis for each child taking into account their needs and circumstances.
You may also include that you would like children to be involved in decision-making to allow them to interact with the trustees.
In your particular situation, this would allow the trustees to consider how the funds could be used to best benefit your child (taking into account your wishes), for example by contributing to property (which could be held in the trust). or providing them with a small regular income but retaining most of the capital until they are ready and able to manage the funds.
The contents of the Letter of Wishes can be kept confidential between the trustees, so your children do not need to know what it contains or see a copy.
The Letter of Wishes is not legally binding and trustees may choose not to follow it, especially if a change in circumstances makes your wishes less relevant.
Therefore, the choice of the trustee is vital; They have to be trusted people who understand your child’s problems and her intentions or they could be professionals.
You could choose to have children, but careful thought should be given to whether this would be appropriate or cause conflict between them (only four trustees can act).
Discretionary trusts have tax consequences, including annual charges, exit charges and 10th anniversary charges of up to 6 per cent of the capital value over £325,000.
However, this could be seen as the price to pay to protect assets. If the assets are removed from the trust within two years of death, this is generally tax neutral.
One final observation on the issue of mirror wills. It is important to consider the risk of this agreement whereby a surviving spouse can, of course, change his or her will after his or her spouse’s death and ignore the originally signed agreement.
Although the survivor may have a moral obligation to honor their deceased partner’s wishes, there is no legal obligation to do so.
A common scenario arises when the survivor remarries, makes a new will, and diverts their estate from their children to the new spouse.
An alternative to leaving everything in the hands of the spouse is the use of a life interest trust that provides control over the estate after death and holds the estate for chosen beneficiaries, while ensuring that the life tenant (the spouse) can benefit during your life.
Professional legal advice on discretionary trusts, mirror wills and life interest trusts is imperative. The pros and cons of each will be explained in more detail and then you can make an informed decision.
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