To want to protect my Children's inheritance

[Starssunmoonsky]

Not really an aibu, but I thought I'd post here for traffic.

I'm about to make a Will, but have no idea how I can protect my DC's inheritance from future spouses, or even if it's possible to.

I've got two DC's who are both young adults now, and my DS has just got engaged to his girlfriend. She's a great girl and I think a lot of her and hope she and my DS have a long happy future together.
However, as we all know, unfortunately sometimes marriages don't last and I wouldn't want my DC's to have to hand over half of their inheritance, especially if they end up having a short lived marriage.

I understand that they are the ones who make their own choices and decisions regarding getting married, but when they're 'young and in love' they often don't see that relationships don't always last.

Is there any way I can protect them financially do you know?

They're significant enough for me to not want my DC's to potentially lose half of their share.
I'm aware now though that short marriages don't always end in a 50/50 division

@Starssunmoonsky I'm not trying to catch you out for goodness sakes. If you only want "factual" (legal) advice you'd be better to ask a lawyer than here - a place specifically designed for randoms to give their opinions.

Thanks for the tip.

Who are the trustees, out of interest? Are there professional trustees or is it literally another family member or friend?

The use of trusts in estate planning has been around for a very long time. They can be used to protect the beneficiaries from third party influences as well as themselves!

If OP wants to ensure that her estate will stay with her children then this is a reasonable wish. Her children in law will still benefit if they are with their partner/spouse but if they go through a break up, the trustees will have discretion as to whether they receive anything or not. Trusts are very good at ensuring your assets remain with your blood line and can also help protect against, bankruptcy, losing means tested benefits, future care costs etc. Also, if your beneficiaries are vulnerable, young or perhaps easily influenced, then the trust will ensure they receive the assets in a protected manner and are not frittered away. It is also useful to protect against generational IHT as assets inherited via a discretionary trust will not form part of the beneficiaries estate.

It is imperative however that proper advice is sought, that you have trustees appointed that will follow your wishes and that your wishes are clearly documented. Also, your trustees should understand how a trust works or are given instructions on what type of professional advice to seek at the time of need.

I've sent you a PM OP, I can give you further info if you like. I'm a qualified estate planner and do this planning everyday.

With kindness, I’ll say the same thing that I did to my own mum before she died, there’s really no point putting stipulations on what happens to your money and assets when you’re gone because all it does is cause friction and problems for the people left behind and you won’t be here to know or care what happens, at a time that is awful for everyone you want them to be together and support each other, not be something that they have to deal with and resent each other for.

If you’re set on pursuing a stipulation of kinds the best thing you could possibly do is get all the legal advice now on the options they have for protecting themselves and make sure the instructions are given to them upon your passing, ultimately they need to be trusted to make their own decisions though.

Good question. Appointing trustees is something that needs to be considered carefully. You need at least 2 up to a max of 4. You can choose family members/friends etc but you need to be mindful they may not agree, have different wishes. This is why you need to set out your wishes in a letter of wishes. This is not legally binding as the trustees have the power but if you trust them and don't believe they will be in conflict then it should be fine. It is however best to have someone impartial who will not benefit and has no axe to grind therefore a professional is a good call. Again, this is why good advice is necessary.

I understand your concern and I don't know would if it's possible, but life's. It looks a iut money and I think, if it is possible, setting things up so your children don't "share" their money with future spouses, the parent of your GC, could cause more harm and unhappiness than good.

This is not correct at all. Trusts are used to mitigate lifetime planning for IHT. You can also use trusts to bequeath your assets on death and keep them out of the beneficiaries estate. They are very good at helping mitigate tax legally. There are tax implications if you don't know what you are doing.

@ang69 is it normal for the estate to go in to trust for the remaining spouse as well as any children please?

I don't know who has advised you on this but it is wrong! If your total assets are £1m and I'm assuming you are married then you will have a joint allowance against IHT of £1m. I'm also assuming you have a property you are leaving your child?

No trustee should be taking a % of the estate. You can leave your assets to your son via a trust. No need for setting up charities etc. Also, if you did set up a lifetime trust and continued to benefit from it then it would remain part of your estate for tax purposes.

There is so much bad info out there!

Yes, you can do this also. It is best where possible to equalise the assets including holding any property 50/50. Then, the spouse is named as the primary beneficiary. This means they get to stay in the property and utilise the assets for their needs but the deceased share can't be used for care costs of given to a new partner/spouse. The children then inherit on 2nd death or before if there are a lots of assets and the spouse is adequately catered for.

Trusts are the way forward - not cheap to set up but if you are looking to create long term wealth they work. Obviously not the way of they will want a huge chunk of cash quickly but we want to afford the kids and their kids etc a regular income on top of their jobs. Also put in so they understand it’s on top of working not instead of

DH and I have assets in the region of c£8m. We’re in our late 50’s, kids in their early-mid 20’s. Who know how much will be left when we die but we’re currently living our best lives as are our kids.

Both kids work hard, have good careers and really have their heads screwed on. We will help them to buy property when the time comes.

If there’s anything left when we die they will inherit 50/50. Frankly it’s up to them to manage it how they see fit.

Have seen in my own family differing attitudes towards inheritance planning and funnily the richest ones seem more relaxed about it than the ones with less to leave. No point in tying yourself up in knots about something that may or may not happen after you are dead…. You’ll never know!

Thanks Ang69

Solicitor, remaining parent and family friend who is a chartered accountant.

I don't really understand the logic here. You can only leave money to your children if that's what you wish and trust them. You could put a caveat that if they gave separated from their husband / wife not just divorced then the partner doesn't recover anything??

Perfectly reasonable to ensure your money stays within your ‘bloodline’..

Imagine this scenario:
You leave a large inheritance to your DC.
DC, God forbid, dies.
DIL automatically inherits her DH’s estate
DIL re-marries and has children.
DIL dies and leaves all her estate to her new DH and their kids who are no relation to you. Nothing to her step kids, your grandchildren.

There are legal but expensive ways of avoiding this and we have taken appropriate steps to endure our legacy remains within the ‘bloodline’.

Thank you, I think it's reasonable too.
And the kind of scenario you've just written is probably more common than people think.

You just need to strongly advise your dc get pre nups if they choose to marry someone less financially well off than they

Exactly this, that's why it's called 'blood line planning'. It doesn't mean you hate everyone that is not related to you, you're just protecting your children/grandchildren from outside forces. Do I want my kids inheritance to end up in a strangers pocket? No I don't, nor do most people! Do I want them to lose it to care fees? Do I want them to pay unnecessary tax? No and no!!

I'm not going to say how much, but it's significantly more than 50k I can assure you.

That only works if your dc is on their second marriage. If it is their first marriage then the Op’s grandchildren will also be the DIL’s children. Second marriages do make things more complex and I think that trusts do become more important then. But your kids are 19 and 21 - let’s not treat them like they are Henry VIII just yet!

Three things come to mind for me:-

1. It is worth remembering that if you ask a solicitor if they think it is a good idea for you to set up a trust then what you are actually saying is “would you like lots of fees from me?” I don’t know how much a trust would be to set up but I suspect that a decent one that covers all eventualities would be “many thousands”. That is money that your children will never see.
2. Trusts are,by nature, restrictive. There will be things that your children won’t be able to do with the money that they would have otherwise. It is a “less optimum” solution if your children do end up with happy marriages.
3. A trust also is likely to damage relationships. Probably yours with your child (you are saying that you don’t trust their choices), definitely yours with any daughter or son in law and quite possibly your children’s with their spouses. I have a marriage similar to that of your son. We married very young and have always shared all assets completely. Money is literally the one thing that we have never argued about as we have always been completely together. If you had added a trust though - that would have changed things. For example - I was by far the main earner for the first 10 years of our marriage. (I still am now but the difference is small as I work part time.) It was never a big deal. But if dh had had a trust then I would have been very unenthusiastic about sharing my (far higher) salary with him. It would have been a very different marriage.

It’s definitely possible - DP’s parents came back from a trip to the solicitor proudly telling him they’d arranged for money to be kept “in the blood line” so that if they died and he died, I wouldn’t get a penny if I married someone else. Tbh this has damaged my relationship with them. I’ve been with DP 10 years, I saw them as a bonus family who I cared for and who cared for me. I hadn’t thought about their money at all until that point and didn’t expect a penny of it, but the thought that they clearly didn’t trust me to use their money for the best interests of my child (their grandchild) in the scenario where I’d lost both them and my DP, really hurt.

Thankfully my DP was equally hurt by this set up, since we agreed between us years ago that we’d want the other to move on and be happy in another relationship if we were to die, and asked them to change it. Thankfully they did, but sporadically when I remember that was their intention it still upsets me.

I understand you wanting to protect your children, but I would urge you to think about the emotional, as well as practical, impact later down the line, especially if you end up having grandchildren. And fgs don’t tell your child’s DP your plans!

@Ang69 Useful information - where could I find details of registered individuals?