Securing your Child’s Future
Securing your Child’s Future
Correctly drafted wills are key to managing assets for the future financial security of your family and you should make sure they are regularly updated as your family grows and develops.
With relation to young families, one aspect of will writing that often gets overlooked is the question of guardianship for children, should both parents pass away whilst the children are still legally classified as minors (generally under 18 years in this respect). If you do not appoint a guardian to look after your children and no other surviving parent with parental responsibility exists, then the family court will decide who to appoint as guardians for your children. This may very well not be someone your children know or are close to and could lead to disputes amongst your family.
By appointing a guardian(s) you can ensure your children are raised by people you trust and consider appropriate for this challenging role. It will also reduce the time taken to settle the question of guardianship, reducing the stress for your children in this most difficult time.
Another interesting possibility regarding inheritance, particularly for those with larger estates that will have an Inheritance Tax liability, is the concept of a Deed of Variation. Put simply, this is a deed whereby you gift, or vary, your inheritance to the benefit of someone else. The advantage is that, when appropriately drafted, the deed is written back into the Will of the deceased for inheritance tax purposes, so it is as though the assets always passed directly to the new beneficiary under the Will and not via you as the original beneficiary.
There are two main reasons for entering into a deed of variation. First, where you wish the benefit under an estate to pass elsewhere. This might be because you have no need of the assets or do not want to increase the size of your own estate. And second, because changing a will or redirecting assets under intestacy may save inheritance tax on the estate in question.
With regard to families a common use of this concept is to effectively skip a generation and pass an inheritance onto grandchildren who might have smaller estates of their own, or greater need of the assets, perhaps to fund the purchase of a property.
There are of course rules covering the use of a Deed of Variation. Notably these include that: the deed must be completed within two years of the date of the deceased’s death, any beneficiary that will be negatively affected by the alteration must agree to the change and sign the deed and there can be no financial inducement to any beneficiary that enters the deed.
This information contained in this article is not to be construed as legal/tax advice nor relied upon. We recommend that you seek professional advice from a solicitor or accountant.
Wills & Trusts, Judge & Priestley LLP
020 8290 0333