Modern life encompasses a wide range of family structures. The ‘blended’ family – a relationship where one or both parties have children from previous relationships – is now commonplace.
Everyone needs a clear plan of who they wish to benefit in the event of their death and how their assets will pass on in the most tax and cost-effective way possible. But creating such a plan is not always easy – and those living as part of a blended family often face even greater challenges in this respect.
The ending of one relationship and the beginning of another is likely to mean the revisiting of existing plans. The chances of priorities not being universally shared within the family increases and it can become more difficult to strike the right balance between those closest to you.
A failure to make adequate arrangements can lead to your wishes not being carried out in the event of your death or, even worse, lengthy and expensive disputes over your estate afterwards.
A Will is a fundamental document to have in place, but separate Trust documents and/or ‘letters of wishes’ might also be required in relation to lump sums due under life insurance policies, pension death benefits and death-in-service benefits.
Trusts – whether contained within Wills or separately – can be a very useful method of striking a balance between your desire to provide for your spouse or partner whilst protecting assets for your children from a previous relationship in the longer term.
The Inheritance Tax (IHT) position should also not be overlooked. Married couples are provided with exemptions and additional allowances which are not available to unmarried couples (adding to the general lack of rights provided to cohabitees on separation or death).
The recent introduction of the ‘residence nil rate band’ has further complicated matters, and those who have been widowed may have additional planning opportunities available to them.
The advice of a specialist solicitor has perhaps never been more crucial.
The Private Client team at Palmers Solicitors – including members of the Society of Trust & Estate Practitioners and Association of Lifetime Lawyers – can help you to devise and implement an effective plan, advising on the creation or revision of Wills, Lasting Powers of Attorney, the potential use of Trusts to create a balance between competing demands and the IHT implications of what is proposed.
For more information, please contact Tim Steele of our South Woodham Ferrers Private Client team at enquiries@palmerslaw.co.uk