Married children are not receiving their inheritances because their parents fear that the family estate will be lost as a result of divorce.
A survey by Investec Wealth and Management suggests around a third of parents have real fears that their inheritance could be lost in this way, with 14 per cent admitting they have little confidence that their children’s marriage will survive long-term.
Such concerns have already led to 14 per cent of respondents making plans to skip a generation by leaving their assets to their grandchildren. A further 13 per cent are considering a discretionary trust, in a bid to ring-fence their estate in the event of their children’s marriages ending in divorce.
Of the 1,000 parents surveyed in the Investec poll, 12 per cent said their children’s marriages had already broken down.
However, divorce was not only the only concern cited amongst respondents to the survey, as 42 per cent doubted their children’s abilities to manage financial affairs, whilst 20 per cent said they feared their children would waste their inheritance on expensive holidays and clothing.
Research also revealed that 14 per cent thought a sudden hand-out might mean their children’s incentive to work hard and earn their own money might lessen.
Simon Bashorun, a financial planner at Investec, said: “In our experience parents may disapprove of their children’s choice of partner but can be reluctant to interfere in case they cause a family rift.
“But with divorce rates as they are in the UK, we are seeing increasing numbers of parents looking to protect wealth from leaving the immediate family, particularly if they’re pessimistic about the state of their children’s marriages.”
Tim Steele, a partner with Palmers, who specialises in Wills and estates, said: “Estate preservation is an important concern when making a Will. No-one wants to think that the wealth they have worked hard to accumulate, is either going to be frittered away or will not benefit those loved ones for which it is intended.
“Discretionary trusts can be a useful tool to protect family wealth from either the threat of divorce or the inclinations of children to spend their inheritance in ways which you do not intend. These trusts have the added benefit of being outside the beneficiary’s own estate for Inheritance Tax purposes and are not included when calculating any means tested benefits.”
For further information on all aspects of estate preservation including discretionary trusts, please contact us.