As more and more people enter into second marriages, the likelihood of there being step children in the family is also increasing. Will making with these blended families and assets can cause difficulties which need to be fully understood and advised on before a Will is put into place, as Wills expert, Louise Wilson explains.
When writing a Will, if it makes reference to “my child or children” this does not include step children. The term “my child or children” will only include biological or formally adopted children of the person making the Will. As such, if a person making a Will wants step children to be included, then the step children do need to be specifically mentioned.
If a person dies without leaving a Will, under the rule of intestacy the estate is distributed in accordance with the Administration of Estates Act 1925. This Act refers to “issue” of the deceased. The definition of issue is direct descendants meaning biological, formally adopted and illegitimate children of a deceased. Again, it does not include step children. So, if you have step children and you do want them to inherit from your estate, it is vital to get a Will into place, otherwise they will not inherit.
When two people are married they often make what is called “mirror Wills”. This means the Wills reflect each other in content and typically, this leaves an estate to a surviving spouse and then on the second death, to the children. Where there are step children included, estates can also include assets brought forward from the previous marriage or relationship and so it seems entirely reasonable, that the children from the previous marriage or relationship are included in a Will even if the second person to die, is their step parent. However, making mirror Wills does not guarantee that the estate will be distributed in accordance with the mirror Wills. The surviving spouse is able to revise and amend their Will, even after the death of the first spouse. So, for example, if the biological parent of a child has died first, leaving his or her estate to the surviving spouse and there are mirror Wills which state the children and the step children shall inherit the estate on the death of the second spouse, if the surviving spouse and step children fall out, there is nothing stopping the surviving spouse from amending their Will to cut out the step children.
Often we are advising the parent who has entered into a second marriage and bought a property with their new spouse from capital brought from their previous marriage or relationship. The parent wants to ensure that their children are not left out of their estate if their (second) spouse survives them whilst still allowing the surviving spouse to live in the property. Whilst mutual Wills can be used, which mean that there is a binding agreement that the Wills will not be amended and can’t be amended after the death of the first person to die, mutual Wills can cause other problems and so are of limited use.
Lifetime Interest Trusts
With such blended families, it is important to understand the implications of such issues and to seek legal advice to ensure that your children or your partner’s children are treated fairly and in accordance with both of your wishes. It is sometimes advisable to consider using Lifetime Interest Trusts over assets which are to be protected for your children if you are in a second marriage. This way, the surviving spouse can still benefit from the asset, for example property, meaning they can continue to live in the property, but the capital is preserved for your children. This type of Trust is flexible for the surviving spouse, as they can continue to live in their home and can often even move to a different property, but the capital of the share of the parent, is preserved for his or her children. The surviving spouse can rewrite their own Will but they have no way of denying their step children of the share of the property which their parent owned. This Trust is also inheritance tax friendly as it preserves the possible inheritance tax allowances for when the estate does pass to the children.
Avoiding your estate passing to step children
On the flip side, if a person wants to avoid any of their Estate passing to step children, then clearly by using a term child or children, it will not include step children. However, failing to make provision for a step child could give raise to a possible claim under the Inheritance (Provision for Family and Dependants) Act 1975, as a step child does come within a class of people who can make a claim on an estate, if they have not been provided for under the terms of a Will or, indeed, the rules of Intestacy.
As such, it is important to leave a letter with the Will to outline why the Wills make no provision for a step child or step children. The letter will not prevent a claim being made but it may be used as evidence to defend any such claim. In addition to this, it is equally important for the person not wanting to make financial provision for a step child or step children to consider whether any of their assets include money/capital brought into the relationship by the parent of the step child. If the Estate does include such money/capital, then a step child’s claim may have grounds for success.
If you are entering into a second marriage and there are children from the previous marriage, it is important that you both have a full discussion about how assets are created going forward in the marriage and how such assets are to be distributed when you have died. The next logical step is to then have that discussion with a solicitor so that they can help protect assets for all children within the blended family to avoid costly disputes further down the line.
For further advice on making a Will or setting up a Trust, please contact a member of our experienced Wills, Tax & Estates team.