Wills for blended families

[stinkingbishop]

Wisdom of crowds, please help, as DH and I are stuck and lawyer not offering suggestions.

I have DD1 who is adult and from a previous marriage. She lives independently. She has no contact with her Dad, paternal GPs dead, so no one else from whom she'll inherit or to support her, though DH is a good stepfather and loves her very much. She is also struggling - out of work, has had health issues.

DH and I have DD2 and DD3 together, who are both tweens.

We are redoing our wills and it's all fine if both of us die at the same time (third each), or DH dies first. However, where we're getting tangled is what happens if I die first. The main point is I'd want DD1 to get something ahead of time. DH would obviously look after the two younger ones through school and uni, so they'd be benefiting from my money, but DD1 could end up waiting decades, when she could do with more timely support.

But I can't just say she gets 30% of my estate straightaway, as we own everything jointly, so that would mean DH having to sell up to raise that. If I said something more like 10% as an advance, which would be more feasible - how is that then accounted for in the future?

I can't be the only person who's grappled with this! Has anyone solved it neatly?

Take out life insurance with her as the beneficiary?

I have gone down that line - have had one for years, and she's beneficiary, but it expires in 5 years. So it's the period after that about which I'm worried. I'm not sure I could get a new one as already 50...

We've got mirror wills , we each inherit every thing from each other. Then when both of us pass the money is split proportionally . Although there's a chance they'll be nothing left to inherit.
How does your daughter live at the moment, is she self sufficient.

You need to see an estate planner. This is exactly what they do. Solicitors generally don't give anything more than basic advice about estate planning and blended families really need specialist advice. An estate planner can do your wills as well, and help you with trusts etc.

The easiest way to deal with it would be via a life interest trust for your husband so that he has the right to reside in the property and to any income from investments and thereafter split between the three children. You could consider an unequal percentage in favour of your daughter if you have any concerns as to whether he would leave her a share of his own assets on his death. You can include a power to advance capital so that if there were funds available, she could have some before his death. This trust is IHT exempt if you are married and preserves transferable nil rate bands.

however, it sounds like you want her to inherit earlier and not have to wait for his death but this is tricky because there may not be enough cash but you don’t yet know what the amount would be.

One way to deal with this would be through a discretionary trust. All your children and your husband would be beneficiaries. You set out in a letter of wishes what you want to happen so perhaps that she gets a third but to consider husbands cash position at the time and maybe pay it in chunks. It can be very flexible and take account of the changing needs of your children. If husband is a beneficiary too then he could have a loan against his estate (so he can have the benefit of the funds/ property in the meantime) for the remaining 2/3 that then pays to your other children on his death. In a discretionary trust no one has a ‘right’ to anything but a hope that trustees will exercise discretion in their favour. You write a letter of wishes that you trust your trustees to follow. Therefore choice of trustees is very important, you might want to consider a solicitor as a trustee if you have concerns as they would be unlikely to deviate from a letter of wishes.

this type of trust could have ongoing IHT charges at a max of 6 percent every 10 years. This only applies if the amount in the trust is over the 325k nil rate band (NRB) so would depend on values if this is to be an issue for you or not. In any event it’s max of 6 percent on the portion over the NRB so may be a price worth paying.

make sure you see a STEP qualified solicitor specialising in wills and estate planning. NOT a will writer as they are not trained and regulated in the same way.

Thanks everyone. This is exactly the kind of advice I was hoping for.