Can I Disinherit My Children?

It is common for parents to help children financially - whether it is a deposit for a first home, help with debt, or business support. However, when that money changes hands, it is important to be clear: was it a gift or a loan? This simple distinction can have significant legal and financial consequences, especially when it comes to estate planning. What is a Gift? A gift is a transfer of money or property made with no expectation of repayment. In legal terms, once given, the money no longer belongs to the giver. Key features of a gift: It is unconditional. There is no written or implied agreement for repayment. The recipient is free to use it however they like. It can affect future Family Protection or Relationship Property claims. It can affect the ability to qualify for residential care subsidy or other Government support. Family Relationships Care needs to be taken where you are gifting money to your child and their partner, such as to help them into a property. Should that relationship break down, the partner would not necessarily be required to pay back any portion of the gift, therefore walking away with half of the gifted money. Dealing with banks If you are taking out a mortgage or loan with a bank, gifting certificates are often required where a family member is advancing a portion of the purchase price. This is so the bank isn’t in competition with anyone to get their money back should the bank loan end up in default. There are ways to record this on terms acceptable to the bank, while also protecting the advance. The document needs to be worded in such a way that doesn’t impede on the banks rights to be “first in line”. Estate implications If you have made significant gifts during your lifetime, this can reduce the assets available in your estate. If you give more to one child than another, it could cause disputes or be challenged under the Family Protection Act 1955 by children who believe they have not been adequately provided for. What is a Loan? A loan, by contrast, is money given with the expectation it will be paid back, either on demand or on agreed terms. Key features of a loan: It may be interest-free or interest-bearing. There is usually some record of it (e.g. a loan agreement or promissory note). It may be repayable on death or earlier. It can be secured (e.g. against property) or unsecured. Better protection A loan provides protection in the scenario where you are advancing money to your child and their partner. If this relationship later breaks down, you can “call up” the loan and have this paid back. You can then re-lend the money to your child once the separation is complete for another purchase, if you choose to. However, as noted above, when banks are involved they will usually not allow a loan with interest or a specified repayment date, as this can affect the banks priority if the loan is defaulted. Estate implications A properly documented loan becomes an asset of your estate. Your executors can call the loan in after your death. This is especially useful if you want the amount to be eventually divided fairly among all children but are happy for one child to have the benefit of it in the meantime. Beware of time limits under the Limitation Act 2010 If a loan is not properly documented, or if there is no clear date or mechanism for repayment (such as being repayable “on demand”), you run the risk that the loan becomes unenforceable over time. Under the Limitation Act, the right to enforce a debt usually expires six years after the cause of action arises. If the loan is repayable on demand, that six-year period may begin as soon as the money is transferred - unless otherwise specified. To protect your estate, it is important that any loan agreement includes clear repayment terms and triggers for demand, to ensure it remains recoverable. Why the Difference Matters Failing to document whether financial support was a gift or a loan can lead to: Disputes between siblings over whether the recipient should get more than others. Relationship Property claims, especially if a child separates and their partner claims half of what was received. Unintended tax or trust consequences, if the money was meant to be protected. Expired claims, if the estate cannot legally recover the loan due to limitation periods. How to Protect Your Intentions Document it clearly: Use a deed of gift or a formal loan agreement. This helps your family and your executors understand your intentions. Include repayment terms: Clearly outline when the loan is due, how it can be demanded, and what triggers repayment - this avoids limitation issues. Consider your Will: Your gifting or lending decisions can affect what is in your estate - make sure your Will aligns. Talk to a lawyer: A small amount of advice now can save thousands in legal fees (and family stress) later. Whether you are helping your children financially now or planning for what happens after you are gone, be clear about your intentions. A well-planned estate not only protects your assets but also your family relationships. If you are unsure whether past financial help was a gift or a loan - or you want to formalise it - talk to the Holland Beckett Succession and Estates team. This article was first published for First Mortgage Trust, July 2025 newsletter.

As we have moved into a more digital age, consideration should be made as to what happens to your digital assets when you die. Increasingly, people are amassing both personal and business digital assets that have value – let’s not forget about James Howells who has spent a considerable fortune trying to dig through a Newport landfill site to find his private access key for his Bitcoin, which is now worth a whopping $800m. So, what are your digital assets, what happens to them when you die, and how can you make sure they are not lost? Your digital assets, which may have more value than others, include: Digital assets on computing devices; Financial accounts, including online gaming accounts, Bitcoin or other cryptocurrency wallets, and FOREX trading accounts; Digital books, music or video streaming; Cloud storage accounts; Payment services; Social media accounts used for marketing or advertising, loyalty programmes and any other; Computer programmes directly installed onto a computer or provide the software as a service; Intellectual property; The infrastructure of an online business – websites and blogs; Customer management services that manage mailing or newsletter descriptions. You may also have assets of sentimental or other value such as photos, family trees (ancestry.com), or emails. The best thing you can do is consider what you wish to happen to these digital assets and make provisions in your Will as to who has the right to access your digital assets, either stored on your computer, phone or that exist online, to amend or remove any profiles and provide any other notifications as required.   Provision should also be made in your Will as to where all of the details of relevant passwords and logins are contained.  It is therefore important to have a “password safe or manager” that stores and encrypts a list of passwords and user names for all online assets with the master password either provided in a sealed envelope with your Will or some other way with your Executors. In addition, many online providers have their own policies as to what happens when you die and the rights to those digital assets will vary from provider to provider – for example, Facebook allows people to turn a deceased profile into a memorial page and Google allows you to plan ahead and appoint inactive account managers who are notified if the account is inactive for a certain period of time or you can choose to have the account deleted entirely. Speak to your legal advisor about a specific clause in your Will relating to digital assets and what you would like to achieve.  This clause should cover whom you wish to leave your digital assets to, what that includes and any appropriate login data.

Mirror Wills In a typical, nuclear family structure, it is common for a couple to leave their entire estate to each other, and for their Wills to provide that after they have both died the family estate will go to their children. This is commonly known as a mirror Will. In the modern age, however, blended family structures are becoming increasingly common. If you have children from a previous relationship, you may find yourself stuck between wanting to ensure your children are provided for, and also ensuring your partner is looked after when you die. If a couple is comfortable relying on their new partner to provide for their respective children in the surviving spouse or partner’s Will, a mirror Will could still be used. However, these Wills do not create a legally binding agreement between couples. Either spouse or partner is therefore free to change their Will at any time during their lifetime. These Wills frequently result in claims against the estate made by the deceased spouse or partner’s children from a previous relationship. Mutual Wills A mutual Will is another available option. A mutual Will is a mirror Will signed alongside an agreement between the respective Will-makers that they will not amend the terms of the Will in a way that will worsen the position for their stepchildren. While mutual Wills are effective for protecting the interests of both partners’ children, they are restrictive on the surviving partner and can be difficult to enforce. To help avoid the risk of claims against your estate, and to offer peace of mind, a life interest Will may provide the answer. Life Interest Wills In your Will you can grant to somebody a life interest in an asset, giving that person the right to use that asset for the rest of their life. On their death, the asset will pass to the people named in your Will. Life interests may be granted in: Your entire estate; Specific assets e.g. family heirlooms; Real property e.g. the family home; or A right to receive income from estate property e.g. bank account, shares or other investments. A life interest can be a good way to provide for your partner, while still ensuring the asset will eventually be given to the named beneficiaries, usually your children. A common example is where a person provides a life interest in the family home to a spouse or partner, and once their spouse or partner dies the family home will pass to the Will-maker’s children. Often the couple will own the family home in equal shares. This allows each of them to deal with their 1/2 share in their Will in the way they choose. A life interest Will provides a basic level of asset protection. Any assets subject to a life interest will be held by the trustees appointed in the Will and do not legally belong to the person with the benefit of the life interest (such as the surviving spouse or partner). It can therefore provide peace of mind to the Will-maker that all of their loved ones will be looked after. On the other hand, a life interest can be restrictive for the surviving spouse or partner. The surviving spouse or partner effectively loses control over assets that they may have considered to be theirs if they were used by the couple to benefit both of them. Any dealings with the asset will require the trustees of the Will to consent, and will be subject to the terms of the life interest in the Will. Issues can also arise if the circumstances of the surviving partner change, for example, if they need to go into care or move into a retirement village. A life interest Will can also mean the children may not see their inheritance for many years. Holland Beckett’s succession and estates team is here to discuss your particular circumstances to determine if a life interest Will is right for you.