In a typical family situation 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.
What if, however, you have children from a previous relationship? You may want to provide for your children in your Will, but also wish to make sure your new partner is looked after.
A mirror Will is one option. 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.
While a couple may be comfortable relying on their new partner to provide for their respective children in the surviving spouse or partner’s Will, these Wills frequently result in claims against the estate made by the deceased spouse or partner’s children from a previous relationship.
To help avoid such claims and to offer peace of mind, a life interest Will may provide the answer.
What is a life interest?
In your Will you can grant to somebody a life interest in an asset. This will give 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.
A life interest can be a good way to provide for dependents while still ensuring the asset will go the named beneficiaries.
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 person may also provide a life interest in other assets such as funds in a bank account, shares or other investments. As an example, the person’s spouse or partner will have the use of the income generated by such assets during their lifetime, after which the capital remaining can be distributed to the Will-maker’s children.
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. A life interest Will can also mean the children may not see their inheritance for many years.
Holland Beckett Law is here to discuss your particular circumstances to determine if a life interest Will is right for you.
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