Wills & second families. What's normal?

[ChangeItAgainSam]

Trying to write wills, will be looking for a good solicitor to help but wondered what is generally the norm, if there is such a thing.

Dh much older than me, married before, had 2 grown up children. He's been very generous to them including giving them significant sums of money for houses.
Dh and I have 2 children, youngest is just at school. I'm wondering how we'd expect a will normally to be formulated in these circumstances. He's always said he'd provide the same for all children so somehow a will would have to convey this should it be needed. How do we expect it to be broken down? Anyone have any experience of this?
We own our own home etc.

Not a second family, but when writing our wills we put in that the youngest would get the same support through university as the older siblings before anything split. So could you work out the ways the older ones have been supported and say that an allowance needs to be made to provide the same for the youngest ones before any remainder is split?

Another option is could he afford to give the money for houses to your children now and it sits in an account until they need house deposits.

A couple of questions to consider. I assume that the home is the main marital asset?

Is your home owned as joint tenants or tenants in common? (btw, if you don't know the answer to this question then you really should find out).

Also, does he also have large assets outside of the value of the house?

The second question is, will his estate be worth over £500k? This is important for inheritance tax purposes.

"...what is generally the norm, if there is such a thing."

There really is no such thing as a "norm" - that is unless your particular situation fits that "norm".

It depends on the very specific circumstances of your situation. He may, for example, decide to leave a smaller sum to his adult children and then leave the bulk of his estate in trust to your joint children, with yourself as a life tenant, assuming that you own the home as tenants in common.

If you own the home as joint tenants then the home passes to you automatically anyway.

If your DH is going to get advice then I would guess that he is likely going to be advised to hold the property as tenants in common and to leave the bulk of his estate to your joint children in trust.

This makes sense from his point of view. It means that if you were to remarry after his death then you could not disinherit your joint children and leave everything to your new husband.

You may say, "Oh, I would never do that", but there have been any number of threads on MN over the years where exactly this thing has happened and the children have been disinherited.

In this situation, you would be entitled to live in the property for the rest of your life (and, usually, be able to sell it and buy another property if you wished) and have the income from any assets left by your DH - but, of course, you couldn't touch the capital.

@Another2Cats yes tenants in common and yes to over 500k. We have a large family house in London. I'm just concerned that if some kind of equaul spilt were to occur my children would be significantly worse off than the older ones who have had schools, university and houses paid for for them. I was also concerned at the mention I might have tu move out within a year if his death to free money in order topay his children their share of any inheritance. This sounds unreasonable to me.

"...yes to over 500k"

In that case, inheritance tax (IHT) comes into play. If he gave any substantial gifts to his adult children (or anyone else) and he dies within seven years of making a gift then that gift is counted as still belonging to him for IHT purposes.

Other than that, it would seem that your situation:

"...what is generally the norm, if there is such a thing."

really is quite normal.

Where there are children from different marriages then it is very normal to leave either the whole estate or just the family home to the children in trust with what is usually called an "interest in possession" for the surviving spouse.

What this means is that the surviving spouse gets to live in the house and gets any income from the trust (eg if shares are included in the trust or if there is a rental property etc) but cannot touch the capital (unless the will says otherwise).

So, the will will typically be written so that the trust lasts until the surviving spouse dies. But there may be other conditions, for example, if the surviving spouse remarries or cohabits or it may be for a fixed period of time (eg until the youngest child reaches a certain age).

It's entirely down to you/him how you write the will. It is probably most common for spouses to simply allow their surviving spouse to live in the home until their death.

It is also common in wills for the surviving spouse to be allowed to sell the property and buy another and the trust can use it's money towards the new home.

"I was also concerned at the mention I might have tu move out within a year if his death to free money in order topay his children their share of any inheritance."

A properly written will leaving his estate in trust to the children and you as a "Life Tenant" of the property will mean that you do not have to move out.

In contrast, if he were to leave money directly to his adult children then, yes, they could apply to the court for an order to sell the house if you could not afford to buy them out.

"I'm just concerned that if some kind of equaul spilt were to occur my children would be significantly worse off than the older ones who have had schools, university and houses paid for for them."

It certainly doesn't have to be an equal split.

You could do something like:

Adult child A - 10%
Adult child B - 10%
Your child C - 40%
Your child D - 40%

You can split the money in the will any way you want at all. Also, don't forget, that as tenants in common you also get to choose who inherits your share of the house.

Is the house split 50/50 between you and DH?

You said that his estate is worth over £500k. So here is an example of how it might work.

Assume the house is worth £1.2 million and you own it 50/50. That means that his share of the house is worth £600k and so is yours.

In your will, you leave everything to the children you have with him and give him a life interest to remain living in the property.

That means that your child C and your child D each get £300k in trust from your will.

Your DH then leaves his estate to all of the children split as above, ie

Adult child A - 10%
Adult child B - 10%
Your child C - 40%
Your child D - 40%

His estate is also worth £600k and so each of his adult children get £60k each and each of your children get £240k in trust.

All of this is held in trust until both parents have died (unless the will says otherwise).

At that point, in this particular example, each of your children would get £540k (£300k + £240k) and each of the adult children would get £60k.
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Also, if the estate is left in trust with the surviving spouse having a life interest then there is no IHT to pay at all on the value of the trust at the first death.

IHT only becomes payable at the time of the second death and the estate can use the allowances of both spouses when it comes to IHT. This means that, as a couple, you can pass on up to £1 million without paying any IHT.

So, it is straightforward and quite the norm to arrange things so that the surviving spouse can continue living in the family home and you can decide exactly how much to leave to each child.