The shortest Will ever written is rumoured to have read: 'Being of sound mind I spent the lot'.
Funny, yes, but most of us aren't that selfish. We want to leave our home and the money we've earned to our loved ones. There are always unforeseen circumstances, though...
A happily married couple, let's call them the Kings, might plan to leave everything to their children. But what if the husband passes away years before his wife does, and the widow eventually finds a new husband?
How can the Kings make sure their kids will still benefit from all their hard work?
The simple answer is the couple can incorporate a legal trust into their wills. This could, for example, allow the surviving spouse to carry on living in the marital home, and live off any income generated by funds or savings, while preserving the home itself for the children.
There are a few different trusts that you can incorporate into your will. These include:
- A dynasty trust that allows you to bypass a generation and leave a fair bit of money to your grandchildren, and:
- A credit shelter, or family trust that allows you to bequeath a sum to the trust (up to the estate tax exemption figure), and pass the rest of your estate to your other half tax free.
We'll return to look at the different kinds of trust available in greater detail in weeks to come.
In the meantime, if you are a widow/widower planning on shacking up with someone new then it would probably be sensible to be completely upfront about how things are — make sure your children are provided for in a binding will, backed up by a letter of intent, and let your new partner know about it from the off.
Make it clear that it's up to them to make provisions for their own future.
This kind of honest approach would discourage anyone with dishonest intentions, and put your family at ease.
Author: Garry Bushell