How do I protect an inheritance?

[vickyfowler]

We are in Scotland

I am potentially going to inherit a property that I have zero interest in keeping so it will be marketed as soon as possible. DH has 2 (adult) children who I absolutely do not want to benefit from the proceeds of this property. We also have adult DC together. If there any way to ensure his DC have no claim on the money in the future?

A quick google shows that, in Scotland, if you keep it completely separate - an account in your name only - as a spouse, he has no automatic right to the money.

That entirely depends on your wills and how the money is ring fences (ie in trust) - there are usually multiple approaches to these issues - I would see s solicitor who specialises in estates and trusts.

Just give it to your intended recipients as soon as you receive it. I'm not sure about Scotland but in England, if you receive an inheritance through someone's will you have up to two years to give it (or a portion of it) away by using either a simple letter of variation or, by getting a solicitor to draw up an official deed of variation.

If you use a deed or letter of variation, the seven years rule for inheritance tax does not apply, as the gift is treated as if it came directly from the testator.

If you die before your DH, your own children, not the stepchildren, are entitled to a share of your estate. The rest can go to him and then when he dies his children will be entitled a share of his estate and the rest will go to whoever he leaves it to in his will.

If he dies first, your inheritance will not form any part of his estate, provided that you follow the rule and keep it strictly in an account in your sole name.

Yes and I have said when the time comes I will get it

Well I do plan to spend some of it but certainly not immediately and definitely not all of it that would be a crazy waste

Is it too late to do a deed of variation on the will so that you do not inherit it and your children do.?

Is it possible to gift a certain percentage of it to your dc now or put it in a long term savings account in their name to access when they're 18? How old are they now? That way you keep what you feel you want to live with and maintain whatever lifestyle you and your dh want to facilitate and the rest is in your child's name?

I don’t want that to happen.

They are adults, but I’m not looking to give it to them or leave it in trust for them, I want to have the money available to me.

Once it’s in your possession it would become a marital asset. Obviously while you’re happily married you and DH can make your own agreements on whether he gets to enjoy any of it or if you get to use it just for you and your kids.

If the marriage were to breakdown he could have a claim to half of it, there are intricacies to that but as a general rule it would be part of the asset pot that gets split. Once he had that money he could give it to whoever he wants.

If you die first it will go to him as your widower up to a certain amount then the rest would go to kids, unless you have legal mechanisms in place like wills and trusts that provide for a different allocation.

Well I have now established it’s not a marital asset. My question isn’t about the marriage breaking down.

if I die first my children have a legal entitlement before anything goes to him, not the other way round.

I appreciate you trying to help, but what you have said is definitely not the case

you need to not bring the property or the money ( once it’s sold ) into the marriage . That stops it becoming a matrimonial asset.

so open a new bank account in your sole
name and put the money in there.

then you can leave it in your will to your own children ( or whoever else you want apart from your husband ).

if you leave it to him ( and it’s cash or similar ) then his children WILL have a claim on it as it’s movable estate .

you need to see a solicitor and add all this into your will.

I should add - there are 3 things that English posters are misunderstanding about Scot’s law

1. inheritance is not automatically a matrimonial asset
2. The Bairns part is for children not step children
3. the difference between movable and heritable estate

IANAL but make sure your solicitor explains all this to you OP

It’s not puzzling.

Let’s say OP and DH currently have £10k in a joint account and DH dies. £5k of the joint account is deemed to belong to DH and all his children have a claim on it under Scottish law as well as OP

If OP was to inherit £240k and put it in the joint account, and DH then died, then all his children would have a claim over some
of the £125k ie his half of the new balance. Not unreasonably, OP doesn’t want that as she wants the money to support her in life, retirement etc.

If OP dies first, her children and DH have a claim on the £240k (if kept separate) and £5k of the joint account. She doesn’t mind that DH’s share of the £240k (if not spent) would later be split between the 4 kids. Because she would be dead and wouldn’t need the money.

There are solicitors up here who advertise that they can protect inheritances via a trust.

So long as they're not adopted by you, stepchildren have no claim to any money so long as it's only in your name.

Where they would be able to inherit indirectly would be if your husband outlived you. Then ISTR he has a legal right either to what is willed to him or his legal entitlement. They would then have a claim on the money [upon his death] since it would then be part of his estate.

https://www.harpermacleod.co.uk/insights/legal-rights-in-scotland-what-are-they/

Once it’s in your possession it would become a marital asset.

No, that's wrong. As long as OP keeps it in an account in her sole name it is not a marital asset. Even if they were to divorce, it would not be counted as part of the settlement.

OP can keep it in her own name and spend it how she likes. She can spend it on her DH, she can pay for holidays for both of them. She can pay for home improvements... whatever. But it is not his money, it remains hers as long as it remains in her sole name.

When I was the executor for my husband, the only money included was the money in his bank accounts. We didn't have a joint bank account.

Just to add, @OP that - as I said on another thread - cars are part of the moveable estate. So is jewellery.

When my husband died, his kids' inheritance consisted of cheques plus things like family medals, family jewellery and a musical instrument. I had to have a value for all that - I made sure that what they got was over the third of the moveable estate, to be on the safe side.

(I also sent one of them a cheque as a wedding gift, stating that it was from their father's estate - which it was - but it was over and above their legal entitlement. There was no legal requirement for me to do that.)

Scottish law really does complicate things.

There was a move to include the non-moveable estate, but the Law Society advised against it and it was knocked back.

I have a bank account. I understand they will use a legal entitlement if I die first, that’s fine

This is exactly it and I just didn’t know if the money would be considered marital or not. It seems not so that fine

Thank you. This is exactly what I was trying to find out, although I think I may have worded things badly at the start!

Thanks to all who commented, it’s good to know that none of the money is going to go to his DC bank accounts if I am still alive. And yes we are planning to our a lot of it into the house we own and live in together, gift our DC and enjoy a good holiday or 2 whilst making sure enough is put aside for those rainy days of retirement.

This isn’t really about making sure my DC inherit as much as possible. It’s about making sure I can keep my money whilst I am alive and DHDC can’t have any claim on it. I wouldn’t be giving our DC the bulk of it if I died before DH, it would absolutely be going to him. I understand the legal rights process as I have been through this as a beneficiary.

I understand. I'm glad you got the info you wanted.

In Scotland you can't disinherit your children or spouse. This goes back to a time when the farm or croft or business would go to eldest son, hoping he would look after his widowed mother and younger siblings, sometimes they didn't and were left dependent on the parish, this law was to stop destitution of widows and children without forcing division or sale of heritable property IE farm business etc