Blended Families & Inheritance

Q: It’s about our blended family and our inheritance. My partner and I have lived together for 5 years. We are both 55 and have children from previous relationships. I’m sure you’ve heard of John and Ann Scarle – they each have children from previous marriages. Both sets of children have ended up in court, something about not being able to determine which died first, therefore each set of children is claiming all the inheritance.  Can we avoid this nonsense in our family?

A: It is all very well knowing something in theory. There are concepts one knows, and wants to keep in the theoretical or abstract. Such things one does not wish to be a participant to, or witness to, at least directly. One knows such things so one can prevent them. This one such.

You might know of sporting tournaments in a knockout format. Usually combat sports – chess, karate, MMA, where the last one standing wins.

Winner takes all.

Your question relates to stepsisters who have asked the court rule to on which of John or Ann died last… The person who died last would inherit the assets of the first, and the survivor’s heirs inherit everything. This is the commorientes rule. Last one standing wins.

Blended Families & Inheritance

Blended families and inheritace, planning can avoid disputes.

Commorienties translates to simultaneous deaths .

The rule applies when several people die but order of the deaths cannot be established.

By this rule, the older person is said to have died first.  This couple, who had children from previous relationships were found dead in their home in October 2016. John was older. To you and me the rule is clear, it’s, one of those things one learns on the first day’s training as a will draughtsman, but, John’s children say he died after his [younger] wife.

They have a task worthy of Hercules proving this assertion.

I know as much of the facts as you do, I know what I read on wireless and hear in the newspapers. Let’s recall that eminent legal scholar,

Judge Rinder:  ‘It is endlessly fascinating when you look at two sides of a dispute … that, particularly disputes over money, there’s [sic] a number of things to say about that. Disputes about money are rarely about money. When you sort of start unpacking the issues involved, they’re almost about emotional issues’.

I take it you wish all your children to benefit from your estates irrespective of the order of your deaths. We want no  ‘last one standing wins’ foolishness.

Here’s How

First, determine the proportions is which you wish the children to inherit.

Equalise your respective estates to the extent possible. For most people, the primary asset is the family residence, therefore hold the house as joint tenants. Joint tenancy allows each of you  to leave your share of the house as you please.

Draft your lasting powers of attorney, considering the appointment of professional attorneys for some property and financial affairs matters.

Write your wills. By your will, each would leave his or her assets to a trusts. The children would the ultimate beneficiary of the trusts. The manner and style of the trusts would be for another day.

This arrangement takes advantage of the current inheritance tax allowances – the residential nil rate band is available to estates that are left to familial descendants – the allowance would be lost if your partner’s children inherited from you and vice versa.

The most important element of this arrangement is that the survivor of you and your partner would be able to stay in the family home [there would be no restraint on moving house or downsizing] for the rest of his or her days.

On the death of the second of you… no court fights.

So, with blended families, inheritance disputes can be avoided, just ask me for advice.

What to read next: Inheritance Planning, Deliberate or Criminal