No will, lump sum, stepchildren

[Lovebird1912]

DH passed away recently, having been diagnosed with terminal cancer last year. His death was very sudden and he hadn't made a will yet.
Under intestacy rules, his estate will pass to me, as it's under the threshold. However, through his work pension, I have received a lump sum (death grant) of over £100k. This was paid straight to me, as decided by the pension fund trustees, and therefore didn't get counted into his estate.
Now, if he'd had the time, I'm sure he would have given direction as to how to divide up the lump sum between me and the children (our two children 7 and 4, and two adult children from his first marriage).
So what should I do now?
The DSS lives away from home and has done so for the last 5-6 years, since going off to uni. The DSD lives with me and will go to uni in Sept.
Not quite sure whether the DSC expect to receive an inheritance at this point. Certainly I'll need to get a will drawn up which includes the DSC.
I know there's no rush in doing anything, but I would appreciate your thoughts on this. Anything I should consider? Thank you.

So sorry for your loss.

This is tricky. How are your finances generally? Are you going to struggle? Is the rest of his estate going to remain with you or be divided in some way?

I think if you are financially okay then i would divide the 100k between the 5 of you (so 20k each), putting the money in trust for your smaller children and giving the money directly to the older ones (maybe waiting till the younger one finishes uni? Depends how mature she is.).

If things are rocky then i would say you need to use it to provide stability for your younger kids - and the DSD who, i assume, will be coming home to you during uni holidays etc.

Thanks Ginnels. Overall finances will be okay-ish, I'm working ft ATM, but hoping to reduce to 30hrs. DH main part of the estate is our house (as my name wasn't on the deeds), so savings plus some money from life assurance will be used to pay off mortgage and credit cards, after which there won't be any cash left as part of his estate.
DSD will continue to live at home while at uni. Tbh I trust her more with money than her older brother, who I'm sure would blow any inheritance within no time at all and have nothing to show for it...

I would wait till you minor children are adults and then look at how your finances are.

So sorry that you find yourself in this very sad position.

The lump sum was paid to you as his widow to help provide for you and any dependent children. I wouldn't have thought of it as something to be shared out equally. Who knows, God forbid, what might happen in the future? You, of all people, know the uncertainty of life.

I would make a will in which all four children are treated equally but put the lump sum aside for the moment. At some point, you might give each of the children a small advance on their inheritance, perhaps at age 25, or for some special purpose like a wedding or house deposit, but I would keep the bulk of the lump sum intact, at least till your younger children are financially independent. As things are, you have no savings. You need to think a long way ahead to a time when you might need some money in the bank for your old age.

Provision for dependants won't apply to this £100,000 though. It's a death in service benefit. The husband could have assigned it elsewhere if he'd chosen but it would never have been part of his estate.
However given the numerous uncertainties and yes the prospect of comeback from other parties I would certainly sit on it for now OP. You would not believe how badly people can behave over wills. I know somebody who shared a similar payment openhandedly only to have his horrible stepchildren try to over turn the will which would have seen him homeless! Op - make a fair will but give nothing away now.

Thanks for your views.
Thymeout - that's what I would prefer, to give money towards a 'life event' or house deposit or similar. Wouldn't want to see the money just frittered away.
Babybarrister - the ex wife remarried, so as far as I understand she wouldn't have a case to apply for provision. Similarly, the DSS has lived away from home independently for a number of years, without DH providing for him on a regular basis (obv he did help him out with money every now and then), so I don't think he'd have a v strong case for provision, no? As for DSD, everything carries on as usual with her staying here. This is her home, the little ones adore her, she's good company. I wouldn't dream of changing anything.
In a way, I want to do the right thing, but at the same time I'm uneasy about disclosing the lump sum amount. It's not as if I'm going to spend it on myself and my kids only, but as you have pointed out above, it gives us good security. Best to leave things settle, get a will done and then see what happens.

Especially given that your stepdaughter lives with you I don't think that there's any question that providing you all with security is the right thing to do.

I would also keep your finances quiet !

Yes - very much agree with Mellow about keeping finances private.

It might help if you thought of this lump sum as part of your pension, which it is. You wouldn't feel obliged to share details of how much the pension pays a month with your dsc, so no need to feel that you need to tell them about the lump sum in detail or at all.

Another problem with passing some on to them now is that they will see it as a legacy, their dad's money, which it is not. It is your money, as his widow. And, psychogically, you are moving into risky step/second wife territory. You have a good relationship now, but you don't want them feeling that they have some sort of entitlement to it and that they should have been given more. If/when you pass on some of it later, for a life event, it will be in the same spirit as a couple might do and what your husband would have wished. Not something they might feel is only their due, and perhaps not enough. Sorry to take this tack, but as pp said, people do behave uncharacteristically when death-related money is an issue.

And whatever you give to them can't be taken back. The money was given to you as a parent with dependent children. It's a big ask to expect a sibling to feel responsible for the other siblings if they were in financial need. In fact, when you make your will, it might be a good idea to ask the solicitor if there were some way of ring-fencing this money until the younger children have reached their majority, so that it is not part of your estate. I'm assuming the question of guardianship for the younger dc's might be raised. Logically this money should be separate and for a guardian to administer on their behalf. You don't want it tied up so you lose control over it and, as I said, you may need it in later life but there should be some interim measure until all 4 children are independent. Until then, the younger ones are a special case.

Btw, I've no legal knowledge, just trying to cover every contingency.

If there was not specific provision made for the adult children then they could make a claim against your DH's estate as babybarrister said upthread. They have 6 months from the date of the grant of representation to do this. I don't know how likely this is in your particular case. Are you close to your DSCs ? Is their mother still alive and likely to press a claim on their behalf ?
The point is that if they were to make a successful claim ( eg for a share of the house) then you may well need the £100k to buy them out/pay them off etc, although they don't have a claim against the £100k itself as it is outside the estate.
If the 6 month point has passed then you are on firmer ground. However as has been pointed out upthread you don't know what the future holds and you may find yourself in need of those funds in the future ? What happens if you get ill in the future for example and are unable to work ?
I would set aside the £100k; maybe use some for a house deposit for the older children at an appropriate time if you wish and finances allow. Also make a will leaving assets to 4 children equally.

I wouldn't give the DSC money just yet if they're not expecting it. Better to use it to help out at time when they need it.

However you do need to change your own will - otherwise your own DCs will inherit everything you own, and your DSC will get nothing, which doesn't seem very fair as some of that money (the house at least) is really from their father.

You might want to leave more of your estate to your own DCs a) because they're younger so may need to be provided for in childhood and b) because your DSC may inherit from their DM too, whereas your will will be leaving the money from both parents to your younger DCs.

I am so sorry about your DH. It's very sad.

I would split the £100,000 into 5 as already suggested then write a will dividing your estate between all the children. Depending on what you want and depending on whether your Step kids are likely to inherit from their mother I might divide your will so that your Step kids get half the amount your kids get.

I might give the step kids their money straight away or I might tell them about the money but tell them that technically the money is yours but that you know their father would like them to have it and that you think he would like them to have it for a deposit for a house. I would however, be tempted to give it to them straightaway. They are old enough to be responsible for their own money and if your DSS chooses to waste it I suppose it his choice.

I think that this would be a fair way of doing it.

You step children are old enough to discuss this with them and I wouldn't be suprised if they already been wondering what would happen with any money or inheritance. Money causes so many problems within families - it much better if you can be open and honest with each other. It's even better to write things down and formalise things. Then everyone knows where they stand and also so that there are less opportunities for misunderstandings I speak from experience

I think you should hang on to it.your dh could have nominated this to be divided between them but he didn't. If there is no life assurance beyond paying off the mortgage, you need to keep this to give you some security and peace of mind. Priorise making a will to ensure they will get a fair share of their dads input