I made my first Will eight years ago, when times were simpler. My only concern was who would receive my David Campese-signed World Cup Final program and Fender Telecaster. Since then I have married, own a property with my wife and have two young children. There are now three people more important than anything else. More important than a Fender.
I want to ensure that if anything should happen that my wife and children are provided for and protected. However, if an individual dies without leaving a Will the Intestacy Rules apply. These are far from ideal in many cases.
Under the Intestacy Rules, if you die leaving a spouse and children, the surviving spouse will receive the first £250,000 from your estate outright, with an additional sum of half of the remainder. The other half is left upon trust for your children to inherit at the age of 18. Meanwhile, if you are unmarried at the time of death, the intestacy rules do not provide anything at all for the surviving partner, and the entire estate would pass to your children.
In the event that both spouses die, their estates would pass entirely to their children, but again to inherit at the age of 18. I, for one, would not have been in a position to handle a significant inheritance at this age, particularly following a potentially traumatic event. Furthermore, the intestacy rules do not automatically appoint guardians for children where both parents die. This can result in messy inter-family litigation, and the children may ultimately end up in the care of individuals you would not have chosen.
When parents of young children ask for my advice regarding their Wills, there are three things I ask them to consider. First, is the appointment of guardians. Many will wish to appoint siblings or parents, though you can appoint anyone to act in this position. It is also worth ensuring that the Executors and Trustees of your estate have the power to release funds to assist with the financial burden of acting as guardian.
The next will be the appointment of Executors and Trustees. These are the individuals who administer the estate and control the funds until such time as your children ultimately inherit. Though these can be the same people as the guardians, it is worth considering independent individuals, to ensure there is some neutrality in the management of the funds.
Finally, there is the age at which the children are to inherit. You can impose a specific age, such as 21 or 25. However, I often advise parents to consider the flexibility provided by a Discretionary Trust. Under a Discretionary Trust your trustees will have the discretion to decide as and when the beneficiary is to receive part of their inheritance. For example, part may be used at the age of 18 for University fees, part towards the purchase of a house at 23, and the entire amount at a time when they are more financially responsible. The trustees may also make a loan to the beneficiary for the purchase of a property, to help protect the inheritance from divorce or bankruptcy.
I am aware that becoming a parent is a life changing and financially demanding experience. However, a properly drafted Will is something else to add to the list of travel systems, stair gates, sleep suits, moses baskets and baby monitors.