Are you Disinheriting your Children without knowing it?
We all know the importance of making a Will, don’t we?
Well, it would appear we don’t. Only about 30% of the adult population have a Will in place. This is in its self quite worrying, because if you die without a valid Will the Government will dictate where your estate goes. It may well be distributed to people you don’t know or don’t like! (This is known as the rules of Intestacy). The importance of making a valid Will cannot be overstated! However, it is important to make the right Will for your personal circumstances. No two Wills are the same, because everyone has different intentions and family dynamics. The Laws of England and Wales also specify how a Will should be written, signed and witnessed. If any of these are wrong, then the Will is not valid and again, the Government dictates where your estate goes.
What is a Mirror Will?
Many of our clients come to us wanting to update their existing Will. Quite worryingly, but also very commonly, the existing Will they have simply says, “on my death I leave everything to my Wife (Partner) and if they do not survive me, then to the children in equal shares”. The other spouse or partner has a Will saying the same but leaving everything to the Husband (other Partner) and then to the children. This is known as a Mirror Will, simply because one Will is a mirror of the other.
If you make a Mirror Will leaving everything to your partner, spouse, civil partner and then to the children, you are relying on that person to respect you wishes and not to change their Will. There is nothing in English law to prevent the other person, who has agreed with you not to change their Will, from doing so at any time. In fact, they could if they so wished, make a Mirror Will with you one day, then change theirs completely the next day without you even knowing or being told! The biggest dangerous where a couple use Mirror Wills are, Remarriage, Bankruptcy or other money issues, coercion and Care Fees.
If one spouse/civil partner dies it is very possible the remaining spouse/civil partner will meet someone and end up getting married again. In fact, if the death of the first spouse/civil partner occurs when the couple are young, it is quite likely, but it also happens when people are in their 60’s, 70’s and 80’s. On marriage, any existing Will is revoked (cancelled), unless it was written in contemplation of that new marriage. Therefore, the Mirror Will that you both made all those years ago, and which you are relying on to ensure your children inherit, is no longer valid and the rules of intestacy take over. It is quite possible the new spouse will inherit everything! The other thing to consider is what would happen if that new marriage ends in divorce? It is likely the new spouse/civil partner would be awarded 50% of the family pot. This may well be 50% of everything you spouse/civil partner owns, including everything you left to them in your Mirror Will.
Where a couple have used Mirror Wills and one has died, the remaining spouse/civil partner could find themselves in financial difficulty and maybe even become bankrupt. Should this happen, they can lose everything you have worked for and the children end up with nothing. Sometimes, the person left behind can be coerced into changing their Will by an individual, leaving the entire estate to that person. This could be one of the children convincing mum/dad to change their Will and cutting the other child out completely. It could and does happen, that a friend, relative or even a carer could convince the remaining spouse/civil partner to change their Will, so they are the only person who inherits from the Will. Again, the children get nothing!
When someone goes into care, their assets are assessed by the local authority and then a decision is made as to who will pay for that care. If you have over £23,250 in assets and that includes all income, savings and the individuals home, then that individual has to pay for the care they receive. Between this amount and £14,250 the local authority will assist with the costs, but it is not until the remaining assets have been depleted and the individual needing care has £14,250 left that the local authority will cover the cost of care. of course, the cost of care varies greatly over the county, but you should expect to pay anything between £700 to £1,200 per month for care. The better the care home or where more complex the care, the more expensive it is per week. If you live along the South cost, you can expect to pay in the region of £1,000 per week. Again, where one spouse/civil partner has been left everything in a Mirror Will and they now own all the assets, the means test assessment is going to include all of the wealth the deceased spouse/civil partner had on their death and left to the remaining spouse/civil partner. This means the House, savings and other assets are now going to be used to pay for care. The children may be left with £14,250!
A True case where the One Child Lost Their Inheritance because of a Mirror Will
The sad and distressing case of Stuart Herd. Stuart’s father, William Herd, had become a widower in 1986, when his beloved wife died. Stuart was concerned that his father would live the rest of his life on his own. He was therefore happy, when his father met Dorothy. The couple married some time later and being a shrewd couple, William and his new wife made new Mirror Wills. They left everything to each other first and then, when the second of them died the estate would be split between the two families. This seemed like the right thing to do and it would mean William or Dorothy would be able to live their life in comfort and then the respective family members would inherit when the last of the pair died.
However, sometime after William died in 1997, Dorothy changed her Will. Something she was legally entitled to do. In her new Will Dorothy left everything to her son and completely cut Stuart out of her Will. When Dorothy died in 2012 her son inherited not only his mother’s wealth, but also all of Stuarts father’s and Stuarts Grandparent’s wealth. Stuart was left with nothing! Do you still want a Mirror Will?
How to Protect Your Family from Accidental Disinheritance
When we speak to our clients who want to take care of their partner, spouse or civil partner, we often recommend the use of lifetime trusts. In this way, the first to die can leave all of their estate for the benefit of the other, but with one crucial difference from the story above, the assets are not given to the other person outright, instead it’s held in trust for their benefit until they die. This means the person left behind will receive the income from any capital, but the capital is protected. When the second person dies, the trust is then passed on to the children or whomever the intended beneficiary is, just as the original person had wanted.
We can illustrate this difference with the aid of the case of Stuart. If William and Dorothy had created a Life Interest Trust instead of the Mirror Will, Dorothy would still have been looked after because of the Trust established on William’s death. Dorothy could have changed her Will as many times as she liked before she died. But after Dorothy’s death, Stuart would have received his father’s and Grandparent’s estate just as William had intended all those years before.
A Life Interest Trust can include both Property and cash assets. It will ensure the people you want to inherit your wealth will do so.
Are you thinking about writing a Will?
If so give us a call on 01202 798867 before you do and ask for a free consultation.