Most people think that once they get a will legally drafted and written up, then everything they have stipulated in the will applies legally. However, most people don’t consider the ramifications a second spouse can have on a will and how those assets are passed onto children.
The reality is that if you have a second spouse now and you pass away, then it’s likely it will affect the inheritance your children from your first spouse will receive.
It’s an area you must pay attention to. In this post, we’re going to tell you what key areas to pay careful attention to so everyone gets what they rightfully deserve and relationships are kept as harmonious as possible.
Not realising their wishes become void by their second spouse’s will
Many people don’t realise that their will can actually become void by their second spouse’s will unless they’ve prepared for this.
The situation that commonly occurs is a situation where say a husband has a will that leaves his assets to his second spouse. Then if he dies his assets now become inherited by his second spouse, but if she dies then a situation can occur where his assets are now passed onto her children. Therefore, it essentially voids out the wishes and interests of the husband in this case because they’re now in line with the second spouse’s will.
This is a situation that occurs more than you think and it can ruin many family relationships. The easiest way to avoid this happening is to make sure that in your will, a will trust is drafted that clearly dictates who gets what and where those assets go.
However, this also comes with a couple of implications as you’ll see below.
Inheritance tax implications
A will trust is the easiest way to avoid the dreadful scenario we’ve painted above. However, once you get one created you need to be aware of the Inheritance Tax Implications involved.
Inheritance tax can impact cases where the second wife is given the right to occupy a home or right to income. In this case, her assets will not be passed down to her own children Inheritance Tax (IHT) free. Obviously, this is a detriment to her own children and family because now they’re required to pay an inheritance tax on her assets.
Another scenario that can affect inheritance tax implications is when the second spouse is given the right to solely occupy the home. In this instance, you should be aware of when this right ends. Once it does, the husband’s children will get the benefit of the nil band rate on IHT if the second wife were to die. In this case, the second wife’s children won’t get the nil band rate on IHT.
It’s things like this that both parties need to be aware of when drafting wills so each partner’s families are not affected.
Paying for the upkeep of the home
Another instance that can occur is when the second wife remains in the home after her second husband dies. In this case, the will trust that has been created should always include liquidity funds to maintain the home. Otherwise, the second wife will be responsible for paying to maintain the home and any other professional fees associated with maintaining the will trust.
This can cause a fractured relationship between the second wife and the deceased husband’s children because she is paying for the upkeep of a home that is ultimately not her asset or one that will benefit her children.
As you can see, wills and second spouses can end up being a very tricky situation that can impact the families of both spouses. The way to avoid this is to update your will once you get married for the second time. Then make sure that a will trust has been created for the second spouse that dictates who gets what, and who is liable for financial matters regarding assets of the deceased spouse.
We know that this is a complex issue that can be very confusing, so if you’d like some expert help in this area then get in touch with us today.