15 August 2017
No Second Bite of the Cherry: Defending your money from the ‘Ex’ if you die
By Miranda Marshall, Director, Hayes + Storr.
Back in the 1990s I made a Will for a feisty professional woman who left the following unforgettable bequest to her ex-husband: ‘a bottle of gin, a bottle of whisky and a tin whistle, so he can whistle for any more’.
When couples divorce it is standard practice that their rights to claim against each other’s estate under the Inheritance (Provision for Family and Dependents) Act 1975 are excluded, so that they cannot come back for a second bite of the cherry, if the ex-spouse dies.
Even so, there are still ways that an ‘ex’ (or your child’s ‘ex’) might get at your money through the ‘back-door’.
A major area of concern is provision by your Will for children or grandchildren who are approaching adulthood, but who are not yet financially mature or who might be subject to pressure or undue influence (perhaps by their surviving parent, i.e. your ex-spouse or ex-son/daughter-in-law).
I have seen cases where the child, having received assets from their late parent is then subjected to heavy-handed ‘guidance’ from their surviving parent, who then manipulates their newly-bereaved and vulnerable child so as to gain control of the young adult’s inheritance. The intended inheritance could then be spent on bolstering the ex’s lifestyle rather than being a nest-egg for the young adult.
This can be guarded against by creating a discretionary trust in your Will so that, although the young adult has the benefit of the money, the control of the funds is only handed over once the young adult shows financial maturity and sufficient independence of thought, perhaps on getting their first job and looking to use their inheritance to buy their first home.
The reasons for deciding to put in place such arrangements should be carefully documented in a professionally-drawn Letter of Direction, (sometimes called a Letter of Wishes) backed up by thorough file notes (which can remain confidential, unless required), following a consultation with an experienced qualified lawyer.
If you are divorced or separated and want to give assets to an adult child, have you thought about what would happen to that gift, if your child were to die? The gift would not come back to you or your family. If the child is adult, unmarried and has no children, then the intestacy rules will divide their estate equally between your child’s parents: i.e. half to you and half to the ‘ex’.
To protect your gift, you could in your lifetime create a trust for your child or lend your child the funds, evidenced by a formal Promissory Note. Another route is to encourage your child to make a Will so as give the assets back to you or to a sibling. The same applies to a gift to a grandchild whose parents are divorced, and where the young adult has not yet gained the financial knowledge and independence to manage their funds. This is especially so if you also lack confidence in the ex-son/daughter-in-law’s financial competence or motives.
This article aims to supply general information, but it is not intended to constitute advice. Any similarity to people living or dead is unintended and purely coincidental. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek our specific advice.
If you would like further advice on this matter please contact Miranda on 01328 710210. For advice on any other legal matter call our Fakenham office on 01328 863231 or email firstname.lastname@example.org.