How to make the will fair

[Xanthe68]

A friend has asked for my advice-

A woman marries, she and her husband have two children, they work hard and are lucky and end up with a flat in London (approx £1.5m), a house in the country (similar) and investments of about £2m.

After a long happy marriage the husband dies. The woman inherits his share. 10 years later the woman begins a relationship with another woman- they live together and and they are very happy together for 5 years (and ongoing).

The woman wants to write her will. What should she do? All her wealth comes from the period of her marriage (both partners contributed) and was thought of as the children’s inheritance. But she’s worried about her new partner who doesn’t have much (not lazy- has worked hard all her life in a low paying profession).

WWYD? FWIW the children are very happy about their mum’s new relationship and it’s probable that the late husband would have been as well (based on how he was in life). Would you leave everything to the kids or something to the new partner? (Unmarried).

I agree. The wealth was accumulated during the marriage to the children’s father, morally, it’s theirs.

Without a doubt, I would leave every single penny to the children. I would never marry again either, and I would make sure I had a cast iron will laying out my wishes.
Remember, the children will probably have children and so on, so that money will have to stretch quite far.
I would make this clear to everyone though, so there would no surprises when I died.

I'd leave enough for the wife to buy her own flat and the rest to the kids.

I would give half of the investments to the partner and everything else to the DC. This would give her enough to set up on her own and leave her financially comfortable. It would leave the family homes to the children (what if one of them decided they would like to live in one). If the estate is eroded because of care fees then it's the partner's share that's eroded.

The problem with thinking in specific aspects of the estate, and willing them that way, rather than considering the estate as a whole and putting it in a trust, is that things can change.

And legally, you can’t change a will. So you need to make it about proportions or capital and income.

And the issue is that, unless your friend marries her partner, there’s a sense in which there are few safeguards.

Your friend may live a long life (this is to be hoped for!) and a will which mentions X amount of cash, or a specific property, could be well out of date and unworkable by the time your friend dies.

A substantial estate with investments should produce income. That could be willed to your friend’s partner for her lifetime unless and until she re-partners. But the properties and investments are capital and should be protected for her DC.

@seemsikeaniceday

From what I gather you can make regular gifts, any amount, as long as it's your normal pattern and the gifts you make won't impact financial day to day life negatively.

Yes if you died within 6 years the tax on these gifts would be due, but it's not counted as depreciation of assets as it's a regular thing.

I suppose it depends how old you are. If you are in your mid-late 80's maybe it would be seen as depreciation of assets.

If you are in your 60's then start, make a regular gifting part of your normal expenditure. Once you set this up over time as normal for you, and it's not impacting your ability to pay your bills, then as far as I know it's ok and above board.

I had this recently with a friend of the family who was worried now she's elderly about carrying on with this. But from what I've read, if you've always done the same it's your routine and you don't have to stop if it's not causing you day to day hardship.

I think it's large amounts of money being gifted suddenly when a person is in advancing years and then needs care, that's when it might be seen as a problem.

When mum dies everything (or maybe the majority, if they want to help the kids out. Depends on what kids have now) goes to the wife. When she dies it goes to the kids and grandkids, minus whatever it costs for her to continue the lifestyle they had together. Just as it would have done in any marriage, including the previous one. All my parents and in laws are divorced and re married, and this is the arrangement they all have in varying ways, although there are fewer children involved. I’d probably leave the residences to the kids with a lifetime interest for the wife, and most of whatever income they are living on now. Some capital/assets to go to the kids, assuming this leaves the wife with a roughly equivalent lifestyle. I’d be wary of leaving the wife looking after big properties on a small income, and not able sell it.

we have (in various combinations)

A life interest. This is where I own a house lived in by a parent, but can’t do anything with it at all. They can do anything they like but sell it (unless they are selling it to live, when another comparable property must be purchased. The proceeds, if there any, are mine, but I have no say in what they buy).

However, I do not know what would happen if it needed repairs or maintenance they couldn’t afford, or if they didn’t want to live in it. They can definitely sell it and downsize to a more affordable property, but any proceeds would be mine, not theirs. They cannot be made to do so. I believe I cannot be made to maintain it. So you need to be sure there is adequate income. I doubt we’d be able to mortgage it. This is why my father-in-law left his property to his children with a life interest for his wife, and his pensions to his wife (I suspect this couldn’t be done the other way around)

You can put property (or other assets) in trust. My daughter has one from when her father died. My stepmother set up another to protect her house from being sold for care home fees. It means her property goes to my dad for his lifetime, then split between me and my daughter. She can’t access hers till she’s 21.

I plan to leave mine in partly in Trust for my daughter. She can draw an age-appropriate personal allowance and living expenses have a proportion of the income at 18, some at 21, remainder at 25. Capital to be released for driving lessons and a car, university or vocational training and travel up to a point. But other things to be funded at the discretion of the trustees. Supposing she wants to pursue a professional sports career or act or write novels or something. I’m up for her giving that a go on my dime for a year or two. I’m not up for her living a champagne Charlie lifestyle and running out of cash after a few years. Some will go into a pension for her, so she can start over at 55, if need be. I also want the money to be protected as far as possible from Cocklodgers, divorce and general scammers.

Some will go to my daughter with a life interest to a small group of people I entrust to care for her. So they can live in it and raise her, or rent it out and raise her on the proceeds, or even sell it and invest. They will also be responsible for getting together with and deciding together with whom she will live, and go to school, etc etc if anything happens to me in the next few years.

Husbands share to children, split her half between children and partner.

I would not marry the new partner incase of divorce and also incase of care home fees.

That’s not my experience at all. It’s not any different to when my in-laws lived in their property together, owned by my father in law (late second marriage). I had to sign the paperwork when Step-mother-in-law wanted to live to a bungalow, that’s all. Everything else is just as if it’s hers, only I know for sure it will come to me when she dies. The only issue is I don’t know when. I think of it as a sort of pension supplement. She’s thirty years older than me, so the likelihood is I will get it sometime early in my retirement. It’s theoretically possible she will live to 90 and I will die at 60, but statistically unlikely. She is (most) likely to die in her 80s or 90s and I to inherit in my 50s or 60s. Which is what you’d plan, isn’t it?

If I should predecease her, it will be part of my estate and go to my daughter. And it’s a (comparatively) cheap way of protecting your home from being sold for care home fees. (The trust cost my stepmother 4k, although it’s more comprehensive)

I’ve just read there’s investments as well. As it stands I would definitely leave all the property, investments and cash to the kids, BUT with the benefits (ie use of property and the income) to the partner for her lifetime. And I’d get married. That’s what’s happenning now, so it would be maintaining the status quo until she died too. And the kids don’t lose out, although it could be a wait depending on age and health!

BUT if they are retired or near retiring I’d plan to downsize to split the estate better now. There’s 5 million here. You can push a million into property and get a great house (or two) in most places and everyone gets a million each to invest and live off. But mum keeps the capital and invests on behalf of the partner, and manages the income as normal for them, least for now. If she gifts capital to the ‘new’ partner, she does it while she’s around to discuss it. The kids don’t have to wait decades for their inheritance, the partner can’t cheat them out of it, but also doesn’t have to feel excluded.

There is no husband’s share, they built their assets together, he died and it’s hers to do what she wants with. If I were her, if DP and I married or had a civil partnership I would split it 3 ways but if they didn’t want to make that commitment then I’d leave it all to the children, leaving a caveat that the children contribute equally to purchase somewhere for DP to live but it remains theirs. Obviously the sister of the OP might not want to commit to marriage but I’m just saying what I’d do as if I’d been with someone for 5 years I must love them as I wouldn’t stay with someone just because.

leaving a caveat that the children contribute equally to purchase somewhere for DP to live but it remains theirs

Not a lawyer, but I don't like the sound of that - too vague, and too much decision making by the kids. Surely it would be better to say that the partner gets X% of the total to purchase a property of their choice, which will be owned by the children but X will have a lifetime residency, or something like that.

@Theforkistootall

However, I do not know what would happen if it needed repairs or maintenance they couldn’t afford, or if they didn’t want to live in it. They can definitely sell it and downsize to a more affordable property, but any proceeds would be mine, not theirs. They cannot be made to do so. I believe I cannot be made to maintain it. So you need to be sure there is adequate income. I doubt we’d be able to mortgage it. This is why my father-in-law left his property to his children with a life interest for his wife, and his pensions to his wife (I suspect this couldn’t be done the other way around) This should all be stipulated in the will. It is in mine.

@SkeletonFight cool - it’s tailored, rather than blanket thing? It’s not an issue for us. She has more money than I will ever have - of her own, his pension and hers. But as someone who’s seriously income poor, despite having significant assets, I imagine being landed with a big property to maintain could be stressful if you don’t have the income to go with it and can’t profit by selling it, as could be the case for the ‘new’ partner here.

Yes it states who is responsible for minor maintenance, estate fees etc as opposed to major stuff. Also has conditions about other people moving in etc

Every day’s a school day. I’ve never really checked. After DH died, I just got told ‘it’s yours now’ and SMIL will live there until she dies. In my head, it’s hers. It’s only on paper it’s mine. I often forget all about it. When she wanted to move to a bungalow because of her knees, she had to ask me. I said ‘of course, send the paperwork through’ and the lawyer did, I signed it and sent it back. Job done.

Husband share all to kids. Her share split 3 ways

This. Absolutely the fairest way.

This would be ok as long as "husband's share" is uprated properly for how much it has grown in value. So the split as proposed is in "real terms".

I still think it's bonkers to give that much to a partner of just 5 years, though. This is family money. Sounds like the partner's done very well out of living with the OP's friend for a few years already. Children come first and it's hard to understand why the partner should not support themself.