My death in service policy will pay out a pension to my spouse (inc commonlaw) and a lump sum payment which is a 6 figure sum. I can nominate to split this how I want. The funds are not required to pay off with mortgage we have an endowment that will mature automatically on my (or DPs) death and cover the mortgage.
HOw would you split it?
I am thinking 50% to DP and the rest 3 ways tot eh DC. Is this too much to the DCs? Any recommendations, suggestions or comments?
You need to get particular advice re inheritance tax, and trust funds for the dcs. I am not an expert, but we got a specialist advisor to sort this out for us - otherwise tha taxman will get 40% of anything over 250K (I think that is the correct figure, unless it has gone up).
is it money your partner would need or do you have other provisiosns (as you say mortage is to be paid off)? if not needed leave to kids directly but not til they are 21 or something - that way on your partners death inhertiance tax would not be liable on the main part of the money
The problem with leaving it all to your partner is the ultimate disposal of the money. You may assume that your children will inherit from him, but if he remarries, they may lose out. It happens a lot.
The mortgage is paid off via the Endowment. ATM there wouldn't be much left from teh endowment (£2000-5000 maybe) after paying the mortgage - this will obv. change as we pay of more of the mortgage as it is a repayment mortgage now. This will be the main lump sum...I just don't know how much DP will "need" in such a circumstance
I would recommend you nominate it all to your children and ensure your husband is a Trustee. Death in service proceeds do not form part of your estate for Inheritance Tax purposes. So the full amount would pass to your children at the age you sepcify.
personally, with young children, I would leave the vast bulk to dp (and not worry about ultimate disposal from dp to next generation).
As the kids got older I would update this.
The other issue you have is the fact it is DP (not dh) and inheritance tax. You say it is not getting near £250k - but a 6-figure sum PLUS the house - it is probably getting nearer than you think. And it is £250k in total, not what a beneficiary receives.
Have to go, ds2 biting my leg - think he needs breakfast, will probably pop back to this thread.
We are in this situation and have empoloyed a finacial advisor and our solicitor to sort this for us. We have set up two trust funds for the children's education and a trust fund for me. It is a compex issue, and unless you want the resk of losing lots of it (and once dh dies I cannot afford for that to happen) it is best to get it sorted by professionals
TY MB, appreciate your comments, and sorry that this is looming closer for you than it is for most of us.
There is some other stuff which we need to go thru early next year with an advisor, so will add this to the list. In the meantime I think I will put 70:10:10:10 down. There is nothing to stop DP giving more to DCs if he doesn't need it is there?
I know you can't really control things after your death - and there is no guarantee that your DCs would spend their inheritance in a way that you might see fit - but I would tend to split it 40 (DP) and 20% each for the Dcs with the provision that it was used to support them through university. (but thats just me - you may have different priorities.
I would have the mental image of my ex spending my children's inheritance on motorbikes, 'floozies' and rum after i die. I should hope your DP is a lot more sensible!