Divorce, the in-laws and inheritance
Recent research indicates that a third of parents are not willing to offer an inheritance or financial aid to their married offspring due to the fear of divorce.
Now, whilst I would not suggest you disinherit your nearest and dearest, in this era of the ‘blended’ family, second and sometimes third marriages, most of us want what we have worked hard to achieve to remain ‘in the family’. To achieve this you need to plan accordingly.
A recent report by Investec Investment and Wealth stated that 30% of adults were unwilling to pass on money to their children due to the risk of money leaving the family through divorce.
Every week in our family clinics our solicitors get asked the same question re “who gets what?”, but when you’re making a Will or looking at Inheritance Tax and Trusts the question goes much deeper.
According to the 1,000 parents surveyed, 12% of their children had parted from their spouse and an additional 14% stated unlike their own marriage they had little or no confidence that their children’s would last “a lifetime”.
Extravagant spending was also considered a risk factor, so the Ferrari that the youngest son has planned would have to go on hold if the bank of mum and dad did not pay up. Some 14% of those surveyed believed that an inheritance would lessen the incentive for their children to “work hard and earn their own money”.
In order to mitigate these risks many parents said they preferred to provide smaller financial gifts to aid day-to-day living, as opposed to larger lump sums, or even skip a generation and bequeath assets to grandchildren.
One in seven stated that they were considering a discretionary trust, something which could be a “useful means to protect family wealth from future divorce within a family.
In my dual roles as Family and Private Client Partner I see these issues cropping up every week when advising clients in these areas of law. The benefit of seeing a solicitor is that we look at it with experience and devoid of family emotions and can help you see the bigger picture and plan appropriately.
To speak to Daniel Prince about a Will or a Family Matter you can email him at daniel.prince@pearsonlegal.co.uk
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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.
