Remarriage and inheritance: who gets my money?

If you have remarried you may think that one way or another your estate (i.e. your property and money) will go to your children.

You may be wrong!

Look at this example:

Alan & Betty Smith have 3 grown up children when they divorce. The money and assets are then split equally so that they each have £300,000.

Betty then marries Charles and they buy a house together. Betty puts in £250,000 to match Charles’ contribution. As a married couple they buy in the normal way, as joint tenants.

Of her remaining £50,000, Betty put £30,000 into a joint savings account. The remainder is put into sole bank and saving accounts in Betty’s name.

With or without a Will the maximum that Betty’s 3 children could inherit is £20,000 because the jointly owned house and savings account (with a combined value of £330,000) is already owned by Charles. That money and that share in the house does not and cannot form part of any inheritance.

What can Betty do to ensure that her children can inherit her money and assets?

Firstly, sever the joint tenancy to become tenants-in-common of the house. This means that they would own 50% each.

But Betty doesn’t want Charles to be forced out of the house!

That’s easy, if Betty sets up a Life Interest Trust in her Will it can allow Charles the right to use the house (or it’s value) until he dies and then the half share in the house passes to Betty’s children.

What about the joint savings account?

If money is put into a sole savings account in Betty’s name that can pass directly to the children or it could be put into the Life Interest Trust. The interest accrued would be paid to Charles during his life. On his death the money would be distributed to the children

So by understanding the problem and acting on it a solution can be found quite easily to satisfy all sides.

If you would like know more about how to avoid this problem or to arrange a free no obligation consultation you can call us for free on 0800 878 6565 or 07942 959599 or use our contact page and we will call you back within one working day.

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