The majority of people have only basic Wills in place, with assets being passed absolutely to their chosen beneficiaries, as shown below;
Whilst this is better than having No Will at all, it exposes your wealth to certain common risks!
• Care Costs
If the surviving spouse needs nursing care then the whole estate, including the family home, would be susceptible to the cost of that care.
• Marriage After Death
On first death all the assets become solely owned by the surviving spouse. What if the surviving spouse remarries? Half of the inherited estate could be lost in any Divorce settlement, or even worse all of the estate could be lost, disinheriting your children.
• Creditors or Bankruptcy
If the surviving spouse was subject to creditor claims / bankruptcy then the inherited estate is fully at risk.
• Inheritance Tax (IHT)
IHT would have to be paid on any amount inherited in excess of the current Nil Rate Band and so there is the potential to pay IHT on the same asset twice. Known as the double whammy!
• Your Business Assets
Without the correct planning, the business may have to be sold and these assets may not be preserved for your family.
On second death there are further risks to the inheritance!!
• Your Bloodline
If your children/ grandchildren / chosen beneficiaries are subject to divorce proceedings, then half of the inheritance is at risk to divorce settlements.
• Your Children’s future Care Costs
If the inheritance has been passed to your chosen beneficiaries absolutely, these assets could later be assessed for their own care costs
• Creditors or Bankruptcy
Similarly, if any of your beneficiaries was subject to creditor claims / bankruptcy then the inherited estate is fully at risk.
• Generational IHT
On second death the remaining estate if the inheritance is directed by the survivors Will to the children absolutely, then this adds to the children’s estate and could impact on their own Inheritance Tax.
