The benefit of a will trust for the blended family
Blended families including children from a previous relationship are becoming more usual and can raise concerns as to how each family member can benefit from a person’s estate after they have passed away. In this blog, we’ll dive deeper into will trusts and look at a case study scenario to explain how they work.
What is a trust?
A trust is an arrangement where a person (the trustee) holds money or assets for the benefit of another person (the beneficiary). There can be more than one trustee and more than one beneficiary. A will trust is a trust that is set up in a will and it only begins on the death of the person who made the will and not during their lifetime.
What is the most common type of will trust?
The most common type of will trust for the blended family is a life interest trust.
A life interest trust means that a person benefits from an asset or income during their lifetime and when their beneficial interest ends, usually on their death or earlier remarriage, the trust property passes to another beneficiary. Trustees would also be appointed to manage the trust.
Here’s a case study to explain further:
A common scenario is as follows:
Mr A is married to Mrs A and Mrs A has a child from a previous relationship called BC. Mr A and Mrs A also have a child together called DA.
If Mrs A passed away first and left everything to Mr A in her will, Mr A could then decide not to leave anything to Mrs A’s child after he dies. Even if they made wills together when Mrs A was alive, he could decide to change his will to direct his estate to DA solely or to a new partner. Another issue that could arise is if Mr A were to remarry. Mr A may not intend to change his will, but marriage revokes a will in most cases, so he could accidently prevent Mrs A’s child from inheriting anything.
Instead, Mrs A could have directed in her will that her most valuable asset, her share of their house will go into a life interest trust. This could initially benefit Mr A and on Mr A’s death, it would pass to BC and DA equally. This would mean that even if Mr A changed his will after Mrs A’s death, he could not stop BC and DA from receiving Mrs A’s share of the house after his death. Equally if Mr A were to remarry, it would still revoke his own will but would not prevent Mrs A’s share of the house from passing to BC and DA.
A life interest trust can also be set up to end on the remarriage of a beneficiary, so if Mr A were to remarry, the trust could come to an end and BC and DA would inherit Mrs A’s share of the house.
Making a will trust
As explained in the case study, will trusts can be very beneficial and give peace of mind that your estate will benefit both a spouse and children. We understand that trusts can seem complex however there are many advantages to including them in a will and we can guide you through it.
If you would like further information, please get in touch with a local SFE solicitor here. And click on the following link to read more about wills.