How do we set up inheritances fairly?

[VictoriousPunge]

My husband has two children from a previous relationship. We have a daughter between us. We have straightforward mirror wills, leaving everything to one another.

We want to agree between us what happens to our children's inheritances, preferably in a straightforward way, so that we're both clear on the other's wishes, as are the children when the time comes.

The complication is that although there are three children between us, two of them effectively have three parents to inherit from (mum, dad and stepmum (me), whereas our daughter only has me and my husband. I may inherit a little from my father at some point, and I would want this to go to my daughter, his granddaughter, rather than being split in three (the older two are in their mother's mother's will and will receive a decent amount from her). However I don't want to overthink it or make things complicated by ring-fencing this here and that there. We very much share finances.

Would a fair and simple way of doing things be as follows:

1. Ask executors to treat all assets, regardless of where they came from (eg my dad) as one pot.
2. Divide the total in half, treating one half of this pooled total as 'his' bequests pot and one half as 'mine'.
3. Give my half entirely to my daughter, save a small consideration of say 5% each to the older children to acknowledge our relationship
4. Split my husband's half three ways?

Is this a mean suggestion? Or does it just our youngest gets a fair share?The older children, as I say, will also inherit from their own mother and already have a legacy on its way directly from their grandmother. We don't know how much that will end up being, or how much our youngest might benefit from inheriting other money from my side later on (I have two childless sisters, but they are both married and I don't know what their wills state. Both their husbands have neices).

I have a good relationship with the older children from many weekends and holidays together, so I do absolutely consider them part of my family and not just my husband's children or my daughter's siblings. Maybe we should be doing 50%, 25%, 25%, which might 'feel' nicer for the older kids - but knowing the older ones will inherit from their mum's side this would seem to put DD at a disadvantage.

I'd really appreciate some advice.

You need to get this sorted as I'm sure you know that a mirror will will leave everything to the surviving spouse and they can amend whatever they want. This is especially problematic if they remarry. My inclination would be to arrange for your inheritance to go to your daughter and for the rest to be divided equally.

Dh’s half goes equally to his three children. Your half goes to your (joint) child.

if you have been in step dc’s life a long time, you could give them a token amount (such as the 5% suggested).

Add a clause that any inheritance from your father will go to your dc.

Maybe worth including a letter explaining the reasoning behind this.

I'd split 50/50 - your half goes to your daughter and his half split 3 ways between all his children. To me this is fair. However I would not have mirror wills in your situation. I am not questioning the good intentions of your husband but even if he is well meaning you simply don't know what might happen after you are gone. If he were to marry again for example, his wife could inherit everything and leave your daughter with nothing. Therefore, I would make a will leaving everything you own to your daughter directly, with your husband having the right to live in the marital home (that your daughter now owns 50%) until his death or until he moves.

Edited to add as forgot the grandparent inheritance question: I'd ring fence that and give it to her whilst you are still living if you want her to have it, as soon as you think she can be trusted with that sum of money

The easiest and least contentious way to split an inheritance in this circumstance is for your husband safe to be split three ways between his three kids and for yours to all go to your child. This is normal and what most people do. So 33.3% each for your husbands kids and 66.7% for your joint child. I’d keep it simple and ignore inheritances.

You can ask that your dad’s inheritance goes straight to your dd with a deed of variation if you’d rather not bring it up with your dad. Your h’s ex or ex PIL could also do the same with your stepkids to keep it fair.

You definitely need this drawn up properly. My friend’s mother came from a very wealthy family. When she died, she left everything to her DH.

He remarried and left everything, including his former wife’s £3m of assets to his second wife. She left everything to her own child. My friend never saw a penny of her mothers money.

@VictoriousPunge You can ask your dad to amend his will so your share goes directly to your DD. He can stipulate 18, 21 etc. and you manage the money if she’s not reached that age. Or, you can inherit and have a will variation and hand it over to her in whatever way is necessary for her age. Then her inheritance is out of the pot so to speak. DH’s family really are free to do what they want but are they leaving anything to your DD at all? She is their grandchild! You cannot do anything about the older dc inheriting from their mother.

Regarding your money - leave half to your DH, with a lifetime interest in the house so he’s got a home, and the other half to your joint Dcs . And vice versa. So you stay in the house if he dies. You need to be tenants in common for this to work I think. Would 1/3 each be unfair? All dc belong to your DH so would he want the other two to be left less? Few parents want this for obvious reasons.

Im just not sure you can entirely square this circle as the older dc just have more relatives that aren’t anything to do with you. A good solicitor can talk you through options.

Awful, awful. My DH would never do this intentionally. However we're all capable of being duped into things in the right circumstances as I know only too well from being scammed. Thanks

Everything when the surviving spouse passes should be halved. Your descendants split your half equally and his split his half equally.

This.

I've two children from my previous relationship and two with my current partner. He doesn't have any other children.
we are tenants in common, in other words we own 50% each of our house. The house is in trust for our children but whoever outlives the other of us can stay in the house for their lifetime.

the Will is split so that his half goes to our two children together, and my half goes to all four. This is because my two children from my former relationship will inherit their dads house (he also has a Will to this effect) so basically they all inherit from me, and also from their respective dads. It seemed the fairest way. And we ran it past them and they were happy with it. I hope that all makes sense!

DH's parents are long gone. His dad died very young and his mum died with limited assets eight years ago. This has already been divided between DH and his brother so DH's half is already in the mix.

Also, sorry, the point is the older two would not be left with less, they inherit from their mother, our DD inherits from me. They all inherit from him.

The only way to ensure your money ends up with your DD is to leave it directly to her.

If you go first and leave everything to DH, it will very likely end up split between all his DC or even with his new wife's DC.

The most common way is to own property as tenants in common and leave your estate, including 50% of the property, to your daughter with a life interest to your husband. You can include options to downsize, move into a care home etc. to future proof.
You need a STEP Solicitor to advise you of pros and cons. As pp say mirror wills and potential remarriage can see children disinherited.

Yes, this is fair because as you say step children will inherit from their own mother. You need to have your house tenants in common then leave your half to your DD maybe with clause DH can remain living their until DD turns 18 or if you die after she turns 18 for 1 year after your death. He can downsize and buy something a bit smaller.

An old, slightly senile person can easily be led astray in a way their 50-year-old self could not accommodate. Make it legally watertight.

You can't add a clause in anticipation of a possible inheritance. I wanted anything I might inherit from my parents to go to my sister, when I redid my will a few months ago, but was told I couldn't do it. Get your parent to leave it directly to your child.

It's actually quite complicated.
Let's say you die first
If your property is owned as joint tenants, then your OH get the house. Then the rest of your half of your estate goes where you specify in the will - if you want your daughter to have it, then your OH doesn't get it. And Vice Versa. If he is depending on your pension coming to him in order to keep up the maintenance of the house then that could be a problem.
Or if you leave the rest to your OH, then your daughter may never get her share of your wealthy when your OH dies.

Alternatively, you can own the property as tenants in common, which recognises 50% as yours, and 50% as his. When you die first, the 50% is held in a discretionary trust for your daughter, giving your OH the right to live in it. It starts to get messy if your OH wants to sell up and move, or ends up in care home. You will need to appoint trustees to look after your daughter's interest in the house.

If your OH goes first then the same applies the other way around.

Separating out your father's inheritance is also messy - let's say he leaves £10k to you. You have it in your name, it forms part of the family savings pot of £50k, you jointly maintain the house with your OH but that involved a new boiler, and you go on a couple of expensive hols. When you die, the savings pot is worth £10k - how much of that is the inheritance for your daughter?
I think if you want to pass part of it on to your daughter you would need to put it in her name when you receive it. Perhaps in a junior isa (I think it's £9k per year you're allowed to put in) or create a trust (again, cost, trustees, management, not cheap) to hold it for her when she reaches X age.

You need a solicitor for all of this - they will have seen it all before and will help you create a will that is fair and legally sound.

Although the dc should inherit from their mother, they might not of course. Her life might not turn out as intended. I think you should not assume this. You should take steps to make sure your DD gets her grandfathers money and it stays out of your pot, but your DH is DF to all of them. What does he think about you leaving everything you have to your DD? Plus he could give his dc money he’s already inherited. If you have IHT liability, why is it still in his possession? Plus what about gifts while you are still alive? Are your estates going to attract IHT?

I'd split whatever you and your husband have in 3 and have the 3 children take a third each and I'd ask my dad to leave my share of his inheritance directly to my daughter. If I needed some of it I would ask him to divide it between my daughter and me.

I would not be trying to keep more of the marriage assets for my daughter than for his children unless they were all already grown when you got together in which case I would have just kept my money separate from his and not remarried.

Your inheritance from your side will also be in the mix by the time the inheritance happens, so DHs being in there is neither here nor there.

My friend never saw a penny of her mothers money.

I live in a country where you cannot disinherit your children, thank god.

That adds up to 133%. This scheme gives the joint child 66.6% and the step children 16.52% each.

@BorededIt doesn’t have to be. Wills csn change and the op could do a deed of variation so she passes everything she inherits to her dd. The DH cannot do that but by now the money from his fsmily will be in a joint pot they both benefit from. His dc should benefit from that money if the op separates out her inheritances for her DD.