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Many folks have worked hard all their lives, so they could leave money and real estate to their children and later on, their grandchildren. However, your gift can easily become the subject of a property claim after your child files for divorce. A simple testament is no enough these days to protect your children’s inheritance, so be sure to add least of the following 6 legal safety mechanisms.
When is the gift in danger?
If your loved one decides to purchase a jointly-held property using the inheritance you left them, then that piece of real estate becomes sharable and they are in danger of losing it. Therefore, advise your child to invest solely, that is without a partner, usually their spouse. On your part, you can add a clause to the will indicating that only your child can benefit from the property you’re leaving behind.
How “mirror wills” work
The most typical type of will for married couples are so-called “mirror wills.” As their name suggests, the testamentary provisions of the two wills are the same to the letter, as a mirror image. The spouse that passes away first bequeathed his/her property to their loved one for as long as they live.
Only after both spouses pass away, can their assists be transferred to their children. Once the time comes for children to inherit the joint assents of their parents, the solicitor reads the wills and shares the property as stipulated. However, this proves is not as smooths as it appears at first.
The trouble with “mirror wills”
The biggest issue with mirror wills is the freedom the law allows for any of the spouses to change their mind after their dear one passes away. They could fall out with your children and decide to change their will, disrespecting your final bequeath and giving away your assets to a third party.
After the change their mind and their will, your children will be left penniless, even if you left them a fortune in real estate and cash. That’s why it’s essential you come up with extra layers of legal protection.
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Consider investing in a testamentary trusts
One method to protect your final will is to invest in a testamentary trust. These estate planning tools not only protect your family assets but they come with significant taxation opportunities. Typical testamentary trusts will establish a discretionary trust for each beneficiary, i.e. a trustee.
A huge advantage of a testamentary trust is the fact it comes into existence only after your death. This way, it is much safer to transfer the overall benefits for every child. The beneficiary controlled trust established by such a will is in total control of your children’s inheritance, vouchsafing for it before the law.
You pass away, your spouse remarries?
We’ve mentioned earlier that your former spouse can take advantage of a mirror will to transfer funds to a third party. In most cases, this person will be their new spouse after they remarry. Once the new will is penned in favour of this third party, they are free to manage your former assets at their will.
More often than not, they will simply include their children from previous relationships and hand them down your property. Do you now realize why it is so important to protect your children’s inheritance?
Alternatives for protecting your children’s inheritance
Apart from setting up the aforementioned testamentary trust, you can simply consult a solicitor before you pen the final draft of the will. Family law legal experts are able to suggest bulletproof strategies that ensure your lifelong intentions are carried out after you pass away.
Finally, you have the option of giving your spouse something called “a life interest.” It enables them to collect the income your estate generates while they are alive or they simply won’t have to pay rent for living in your house.
The contract would then stipulate that upon your partner’s death, all the assets pass directly to the beneficiaries, i.e. your children. The biggest advantage of this legal mechanism is the inability of your spouse to alter their will so as to exclude your children in favour of a third party.
Finding the time to sit down and write a will is often not enough to ensure your children receive the inheritance they deserve. Luckily, there are several legal solutions, such as testamentary trusts that ensure your beneficiaries don’t lose a single penny of the assets you bequeathed them.
