Will Trusts – Protecting Your Children Should Your Husband/Wife Remarry After You Die

What is a Will Trust?

A Trust is an arrangement whereby you have one set of people (the Trustees) looking after assets (the Trust fund) that they hold on behalf of others (the Beneficiaries).

A Will Trust can be made and changed at any time during your lifetime by including it in your Will. It comes into effect on your death.

The Will names the Trustees and the Beneficiaries and sets out what assets are to pass into the Trust fund and the terms upon which this is to be held.

• The problem

  If you are a couple, your current Wills may well provide that:

  • When the first of you dies, their estate will be inherited by the survivor of you; and
  • When the survivor of you dies, their estate will be inherited by your children.

  If you die first and your spouse inherits your estate absolutely, there is no guarantee that this will then be inherited by your children when your spouse dies.

  This might be because your spouse remarries. Their existing Will would be revoked by that marriage as a matter of law. Unless they made a new Will leaving their estate to the children, their new spouse would inherit part or all of your joint estates under the law of intestacy.

  Or it might be because your spouse decides to change their Will after you have died to leave your joint estates in a different manner to that you have agreed between you.

  For example, your spouse might fall out with the children and make a new Will to leave your joint estates to some but not all of them or to a cats home.

  If you are a couple with children from previous relationships, your spouse might change their Will after you die to leave your joint estates to their own children only and not to your children.

• The solution

  This problem can be avoided by leaving your estates to the survivor of you on a life interest Will Trust.

  This Trust would give the survivor of you the right to live rent free in property and receive the income (interest, dividends or rent) from invested monies for their lifetime.

  On the survivor’s death, your estate will then be inherited according to the terms of your Will.

  You could leave all your estate to pass into the life interest Trust or only part of it, such as for example your share of your home.

  Care must be taken to ensure that the assets you wish to leave into the life interest Trust are owned on your death, either in your sole name or for jointly owned property as tenants in common.

• How this could work in practice?

  • Arthur and Brenda are married and have two children Cathy and David.
  • Brenda is worried that if she were to die Arthur might remarry and Cathy and David might not receive their inheritance as this happened to her cousins when her aunt died.
  • So she and Arthur make Wills leaving all their estates to pass into a life interest Trust for the benefit of the survivor with provision that on the survivor’s death, Cathy and David will inherit.
  • Arthur and Brenda own their home as tenants in common in equal shares and have some savings in their separate names and some savings in joint names.
  • Brenda dies. Arthur continues to live in the property rent free. The jointly owned savings pass to him automatically by survivorship. He receives the interest from the savings owned in Brenda’s sole name.
  • Arthur does remarry. His existing Will is automatically cancelled by that marriage and he doesn’t get around to making a new one.
  • When Arthur dies, his estate passes to his new wife under the law of intestacy but Brenda’s half share of the property and her savings are protected by the Trust and these are inherited by Cathy and David.