Protecting Inheritance for Children in Blended Families
With increasing rates of re-marriage and the resulting blended families, parents need to take action if they are concerned about protecting inheritance for children from a previous relationship.
Any fans of the mega-hit TV series Succession, which follows the fortunes of the Roy siblings, will know how fraught inheritance issues can be when there is no clear inheritance plan in place, especially when multiple spouses and step-families are involved. But it is a story that is not restricted to the super rich like the Roys, as rising numbers of re-marriages are creating more blended families and are leading to inheritance disputes.
In one recent case to reach the High Court, three siblings found themselves cut out of their inheritance when their stepmother changed her will in favour of their stepbrother, after their father died.
The McLean’s mirror wills
The McLean couple had made what are known as ‘mirror wills’ in 2017, where each reflects the other, so no matter which spouse dies first the outcome should be the same. Those wills shared the couple’s estate equally between four children, three from Mr McLean’s first marriage and the younger son born during their marriage. When the older siblings found themselves cut out of the later will, they went to court, claiming that their father had trusted his second wife “implicitly” over the terms of the inheritance.
The court has to decide whether the doctrine of mutual wills applied to their stepmother’s original 2017 will, which would mean there was an agreement between the couple to make wills with substantially the same terms and conferring reciprocal benefits, and not to revoke them without the consent of the other.
For the doctrine of mutual wills to apply there needs to be a contract between the two testators that both wills will be irrevocable and remain unaltered, and this agreement should be incorporated into the will, or through some other form of evidence. It is not enough to make a mirror or reciprocal will and show some general intention. It is essential that the parties know the options available to them, the risks and benefits associated with each option, and the outcomes that may occur.
A deed and binding obligation
While the McLeans must wait to hear the outcome of their case, another inheritance challenge in similar circumstances has been upheld. After divorce, the Coliccis signed a deed where they covenanted that any shares they still held in their jointly-owned company (a highly successful ice cream empire) would pass to their two children when they died, and both promised to make wills to support that. But the husband had remarried and later made a new will leaving his shares to his second wife, not telling his ex-wife or children what he had done. When he died unexpectedly shortly after, his later will was challenged successfully, as the court ruled that the original deed was a binding obligation which prevented either of the parents from making other arrangements to dispose of their shares on death.
According to latest figures from the Office for National Statistics, almost 30% of marriage are now second or subsequent marriages. Behind the figure is a growing complexity in family structure, with step-mothers, step-fathers, step-children and step-siblings.
A simple solution
Another option is to create a trust within a will. This can be a simple and effective way to make sure that the surviving partner has all they need while alive, but at the same time making sure that children from an earlier relationship do not miss out. It does require specialist help to get things right, but it means you can be sure things will play out as you intend.”
A trust can allow for each partner to leave their estate, or the bulk of it, in trust for the survivor, and then to their children following the survivor’s death. This allows for use of the assets – such as a house or investment income – to support the survivor for the rest of their life, but with the assets held in trust – whether for children from an earlier marriage or a charity or anyone else – when the survivor dies.
Here to Help
Please note the contents of this article are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.