Making a will when you have young children and what you should know
Written by Bik-Ki wong, partner, myerson solicitors
If you have young children, are you aware of the legal position as to what will happen should you die without leaving a Will and the importance of making a Will?
Making a Will is the most common way to appoint guardians for your children and to have control over how your estate passes on your death, ensuring that your children inherit and are provided for in the way that you intend. Myerson Solicitors’ Wills, Trusts, and Probate team explore the importance of making a Will and provide their top tips on how to create a valid Will that protects your children.
Intestacy
In England and Wales, if you die without leaving a Will or with an invalid Will, the default legal position is that your estate will be distributed in accordance with the intestacy rules. Distribution under the intestacy rules will depend on your family circumstances, primarily whether you are married or in a civil partnership or whether you are survived by any children or other descendants.
If you have a spouse and children, your spouse will automatically be entitled to your personal chattels, a statutory legacy in the sum of £322,000 (for deaths after 26 July 2023) and half of the residue. The remaining half of your residue will be divided between your children in equal shares. That therefore, means your children may not inherit at all, depending on the size of your estate.
If you do not have a spouse but do have children, your estate is shared equally between your living children.
By law, a child under 18 cannot accept a gift or a share of an estate until either they reach the age of 18 or marry or enter into a civil partnership. The gift or share will automatically be held on trust by the Administrator dealing with your estate.
If you do not have a spouse or direct descendants, the rules look to benefit your wider blood relatives, such as your parents, your siblings and other remoter relatives.
Therefore, the best way to have control over and a say in who will inherit your estate is to make a Will.
Making a Will
If you have children under the age of 18, it is even more important to make a Will.
Within your Will, you will need to appoint a Guardian for any children under the age of 18. The Guardian will gain parental responsibility for any child in the event no other person with parental responsibility is living. If you do not appoint a guardian or leave a Will, the courts will decide who should be appointed.
You should also appoint Executors and Trustees within your Will. An Executor will manage your estate on your death and distribute your assets in accordance with your Will. Trustees, who most commonly will be the same as your Executors, will administer any trusts within your Will, whether express trusts or implied.
Making a Gift in your Will to a Beneficiary under 18
As an individual under the age of 18 cannot accept a share of an estate of a gift until they reach the age of 18 by law or marry or enter into a civil partnership, if you do wish to leave a gift or share of your estate to a minor, there are a number of ways you can do so within your Will:
Outright Gifts: If you make an outright gift, an automatic bare trust will be established where the gift or share will be held for any minor child until they reach the age of 18. Capital and income can still be used for the minor child’s benefit; however, they will not become legally capable of taking the gift or inheriting it until they reach the age of 18. Once a child reaches the age of 18, they will automatically take possession.
Age Contingent Gifts: You can make a gift contingent upon your child attaining a specific age, for example, 21 or 25. Their entitlement to the gift will be contingent upon them reaching that specified age. As above, provision can be made so that the income and capital can still be paid to the beneficiary, or used for his or her benefit, until they become absolutely entitled.
Life Interest Trust: This type of trust will allow the child an immediate right to income but delays the right to capital until a later date, such as age 21 or 25. This provision might be helpful to claim the additional Inheritance Tax exemption available if you own property and have children.
Discretionary Trust: You could leave assets into a Discretionary Trust, which would be established on your death. Your Trustees would usually have wide-ranging powers at their discretion to invest the trust monies and use the monies for the benefit of any of the beneficiaries. You could create a wide pool of beneficiaries, including your children and any grandchildren or further descendants.
Where any trust is adopted within your Will, it is recommended that you leave a separate Letter of Wishes to provide your Trustees with guidance as to how you would like for the trust monies to be invested and used for the benefit of your children, such as for education or to assist your child in purchasing a car, a property or setting up a business. You should consider the needs of each of your potential beneficiaries. If you have a vulnerable or disabled child with additional needs, you may wish to ask your Trustees to treat that child as the main beneficiary. A Letter of Wishes will help your Trustees administer the trust in the way you intended for it to be administered, although such a Letter will not be legally binding. It is therefore important when making a will, to carefully consider the appointment of Trustees.
Importantly, different trust structures attract different tax liabilities; therefore, we recommend you seek specialist legal advice to ensure the most appropriate and efficient structures are adopted.
Reviewing your Will
Once you have made a Will, you should review this on any life events such as births, marriages, divorces and deaths. It is important to note that marriage automatically revokes a Will unless your Will contains a contemplation of marriage clause. Divorce does not revoke a Will. Therefore, if you are due to marry and have children or want to ensure your children inherit from your estate, you should seek legal advice and make a new will.
You should review your Will at least every 3-5 years to ensure your Will is still appropriate for your requirements. Any changes in financial circumstances (e.g. inheritance from parents) may also affect your circumstances, and your Will and estate planning may need to be adjusted.
Action to take:
Don’t delay! Leaving making a Will to the last minute will mean you will not have time to consider your circumstances carefully, and you may not even have testamentary capacity at that time.
Take note - Gather information relating to your finances and your estate for estate planning purposes. It is important to note not all assets will form part of your estate and, therefore, won’t be distributed under your Will (such as any joint assets or potentially a payout on death under a pension policy).
Seek specialist advice - Speak to a qualified Solicitor specialising in this area of law who is fully insured. Consider instructing a Solicitor who is STEP-qualified and has the appropriate expertise to provide you with the best solution to your needs.
Bik-ki is the Head of the Wills, Trusts, and Probate Team at Myerson Solicitors. Find out more about Myerson here.
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