Inheritance

[Tilly098]

My DM recently married SD. He has adult children and my DM has me and my DS.
DM recently talked to me about her will and said this:
She has substantial assets, separate to SD (who has his own but less). She wants my sibling and me to inherit everything that she owns but if she should die before SD, also wants him to live in or sell the house until he no longer needs it.
In her will she has left everything to SD on the understanding that he will gift the flat and money to my sibling and me and upon his death we will inherit the house (minus a % which will be left to his children).
SDs will mirrors DMs (so DM will inherit everything but should gift SDs children his assets). The reason they've done this is to avoid inheritance tax.

Hope that all makes enough sense!

AIBU to feel uncomfortable with the arrangement DM has made in her will? It feels like she has ignored will writing 101 - ie don't leave anything wishy washy - and there are so many things that could go wrong leaving my DS and me without any inheritance at all from DM.

I've been mulling this over for months, spoken to rellies about it for advice and don't think I can say anything to DM about my concerns/discomfort - aside from anything else, it's not mine to say anything about!

Just wonder what other perspectives are?

Yanbu, and it would be best to say something as she has effectively cut you out of her will.

If your dm and dsd died in an accident with tour mother passing a few days before your sd his children inherit everything and your side nothing. Dito in reverse to your advatage. Speak to dm and sd explain this and let them decide what to do but if unchanged assume you are written out of the will then there will be no shocks x

This won’t avoid inheritance tax in any case.

She needs to do a "bloodline will". An "understanding" means fuck all.

My Grandparents did a similar thing. My GF died first and in the will the grandchildren inherited the house but it couldn't be sold until my GM passed or went into a carehome. Could she do something like that?

If I were you I'd be worried about your SD not giving it to you if your DM died before him.

You need to speak to her about this wills should be explicit in there content. I know someone who’s mum did this to them and they ended up with fuck all as the step father wasn’t legally obligated to give them anything as he inherited everything and then changed his will with different beneficiaries.

That will is a disaster waiting to happen. I’d speak to your Mum. It’s obviously up to her what she does but I think you should let her know what you feel.

Yanbu.
As others have saidone above it's too risky.
My DPs Nan inherited everything from her second husband. She was supposed to have left everything split between her own DCs and her StepDCs as per his wishes.
Did she do this? Did she . Everything went to her own DC outright. However she also outlived him by 20 yrs and needed a lot of care in the end so there was very little left anyway.
As another posted said. He's not legally obliged to do anything if it's not written down. If her will says he inherits, that's basically it.

If they were to die together in an accident, I have a feeling the eldest would be considered the first to die and the estate would pass entirely to the husband or wife. Who is older DM or her husband?

Thank you for your replies! Sounds like my sister and I WNBU to meet DM and talk about our worries. Whether she changes it is another matter but then at least we've be open. So far both have just nodded along as really don't want to offend SD by implying he wouldn't amend his will!

I'm not sure who's older but have a feeling DM is by a year or two.

@Izzy24 that's interesting you say that. As far as I'm aware, that's the whole point of writing the will this way. Spouses don't pay inheritance tax and gifts received 7+years before gifters death aren't subject to tax either.

@Tilly

That’s true - spouses don’t pay inheritance tax.

But the tax burden of a whole estate ( when the second spouse dies) , even assuming the beneficiaries carry out the spirit of the intentions of each individual will, carries greater liability than two individual estates.

If whole estate passes to a spouse then 2 x IHT nil rate band is available on 2nd death so it is IHT tax neutral

But yes ,never leave it up to others to carry out your wishes.Get it down in clear terms n the Will.

She could leave him a liferent interest

If they die at the same time (e.g. plane crash) then the oldest is deemed to die first. That is rare and often Wills say that if the spouse does not survive by 28/30 days then the rest of the Will stands.

If she leaves everything to DSD then you may get nothing. He could spend it all. He could remarry in the future and if go to his new wife. He could give it away to his children. He may just decide not to give you anything.

If they had been married for many years that would be one thing, but not for recently married.

She should put the house into a life interest, so DSD can live there and benefit from it for the rest of his life and then her share goes to you and siblings. He is protected and so is she.

Gifts between spouses are exempt from Inheritance Tax, but life interests are treated as gifts to the life tenant (i.e. DSD) whilst he is alive so no IHT on DM's death and it is taken into account when DSD dies, as it would if he inherited it outright.

DM would have to be over the IHT threshold (£325k plus main residence threshold currently £125k) when she dies for IHT even to be payable.

The case that springs to mind OP is Linda Bellingham.
Have a read, I really felt for her son's.