Sideways dis-inheritance is the phrase used to describe when children, often unintentionally, end up losing out on their share of their parents estate due to remarriage.
If you pass away, and either have no will or a standard mirror will, your property generally passes straight to your spouse, so they now own all the assets.
Should the surviving spouse then remarry, any previous will would be invalid.
After the new marriage if your surviving spouse should pass away before their new spouse then any joint property transfers to their new partner.
This could mean that the assets that you wanted to go to your children after your partner’s passing could go to a complete stranger. If the new spouse/partner then decides to leave all the assets to his/her children then your children could end up with absolutely nothing.
Even families who have always got along can have problems later on.
How do we protect those assets for your bloodline?
Firstly, we need to look at how your property is owned. Most people who buy a property with another person have the ownership arranged as Joint Tenants. This may be the correct way to own a property in certain circumstances but for many people this is not the answer for either Care Cost issues or Inheritance Protection.
The only way to ensure your children get at least a part share of your assets is to make your wishes as clear as possible before you pass in a professionally drafted will and then insert a either a Flexible Lifetime Interest Trust (FLIT) or a Property Protection Trust (PPT) that works within your Will, to ensure that sideways dis-inheritance does not happen.
You need to Sever the tenancy on the property and change the ownership to Tenants In Common, so that each now owns an identifiable 50% (percentages can vary if required). You then set up trust wills, each transferring the share of the property to a Trust. This can safeguard your home.
A Protective Property Trust comes into force on first death. The share of the deceased’s property is passed into a Trust rather than straight to a beneficiary. The Trust is set up to accept the share of the property and at the same time a Lifetime Interest is created for the remaining owner of the other share of the property (normally the remaining spouse or partner). This lifetime interest ensures:
1. The remaining owner can sell the property if they want to, in conjunction with the trust.
2. The remaining owner can buy another property with the proceeds of the sale of the original property.
3. The remaining owner can borrow any cash in the Trust with or without interest as deemed by the Trustees (remember that the remaining spouse/partner would normally be beneficiary and Trustee).
4. The property cannot be sold without the permission of the lifetime tenant.
5. The lifetime tenant cannot be evicted from the house for the rest of their lives.
6. The ultimate beneficiaries of the Trust would normally be the children after second death.
If you would like to speak to one of our experts then call us on 01603 927273 or use the Contact form to get in touch.