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B. Hallam BA, MSc, MSWW
The Midland Will Company,
11 Beechley Drive,
Oakwood Park,
Derby,
DE21 2LP.

Telephone: 01332 608313

E-mail:

CASE STUDIES:


1. Preserve your home for your children
Mr and Mrs White have worked hard all their lives, they own their own home as joint tenants and their children are grown up or at College. They are looking forward to retirement and grandchildren. Their house is the most valuable asset they have and is worth £195,000: they have modest savings.
They are keen to ensure that as much of what they have worked for as possible passes to their children and they are worried that if in later years the survivor’s health fails the cost of dealing with that may seriously erode the value of their childrens’ inheritance. A reduction in their childrens’ inheritance of £95,000 is probable.

What to do?
With a Will, it is possible for each of them to leave their half of the house to a trust. The survivor will have total security and if the right trust is used be able to move if they want to. The effect of the will trust is to  ‘ring fence’ their house and preserve most of its value. This solution is easily done and provided they own their house jointly it is a readily affordable planning strategy.

2. Preserve your home and money for your children
Mr & Mrs Blue have both been married before and each has children from the previous marriage. Their house is worth £300,000 and they each have savings  worth £40,000. They both want their own children to inherit their half of the joint estate, they are also particularly concerned about what might happen if one of them died and the survivor remarried. Naturally they want to ensure that the surviving spouse is not left short of money.

What to do?
This is a common problem nowadays and one that can be solved with a properly drafted Will. As in Case Study 1, it is possible for each of them to leave their half of the house and their own money to a trust which may be made flexible. The survivor would enjoy security of tenure in the house and have the benefit of the income from the money. When the survivor dies the trustees would give the half share and the money to the children of the first of the spouses to die. The children of the surviving spouse would inherit under their Will.

3. Who will look after my Family?
Mr Green & Ms Red have lived happily together for 3 years and neither of them wants to get married. However they now have baby Samantha and are concerned to avoid problems between their families over who would look after her if they were to be killed. They have taken the precaution to increase their Life Cover, but they want to be sure Samantha will be looked after by the people they want. Also, Mr Green’s occupation is hazardous and he is anxious to ensure that Ms Red will inherit all his money.

What to do?
They can appoint Guardians to look after Samantha in their Wills, and they can leave all their money to each other and then to Samantha. Their Wills can also state who would inherit if all three of them were to die in an accident

4. We want our money to stay in our family
Mr & Mrs Magenta’s estate is worth £300,000, they are not in the best of health. They have 3 grown up children, John , James and Sally. John is happily married, James marriage has always been stormy and may end in divorce, whilst his children are from a previous relationship. Sally is mentally and physically disabled and is in receipt of State Benefits. Mr & Mrs Magenta don’t want their hard earned money to leave the family, but nor do they wish to exclude any of their children from the chance of inheriting.

What to do?
In their Wills Mr & Mrs Magenta can leave their estate on Discretionary Trusts. The children and grandchildren are beneficiaries of the trust and may benefit from it as and when necessary. However because they don’t have a legal entitlement to the assets of the trust those assets are not easily accessible by any third party seeking to benefit from what Mr & Mrs Magenta would otherwise have left each of their children.

5. Inheritance tax planning for co-habitees

Mr Bronze & Ms Silver have lived together for many years. They have teenage children and are adamant they don’t want to marry. They own their house worth £250,000 jointly and between them have other assets worth £200,000. Under current law (from April 2009) there is a possible inheritance tax liability of £50,000 that there children would have to pay.

What to do?
Best advice is to get married, but there might be personal, or religious reasons a couple don’t want to as with Mr Bronze and Ms Silver. As a well tested alternative they can use a Discretionary Trust in their Wills to avoid the charge to tax. As with any tax planning the exact terms of the trust would need to be tailored to fit the clients circumstances.

6. Inheritance tax

Mr Gold inherited £350,000 from his first wife Jean when she died 10 years ago. He has recently remarried. Mr Gold and his second wife Pamela own their house jointly. It is worth £300,000. Mr Gold has other assets of £100,000. Mrs Gold inherited £200,000 from her parents. Mr Gold wants to ensure that the money he inherited from his first wife Jean goes to her children. Mr Gold  and his second wife Pamela want their combined estate to pay as little   inheritance tax as possible.

What to do?
From 9th October 2007 the law allows an individual’s personal unused inheritance tax free allowance (‘the nil rate band’) to be transferable to a surviving spouse or registered civil partner. In Mr Gold’s case his first wife Jean left everything to him, so he can use that plus his own nil rate band in his tax planning, but there is a snag. If he simply leaves everything to his second wife Pamela their joint estate will be subject to a £100,000 tax bill. But, with the right Will and planning Mr Gold can ensure that Jean’s children receive  £350,000 and no tax will be payable on the estate of Mr Gold and his second wife Pamela.


It is so important to understand all aspects of the legacy process...
“Dear Brett, thank you for all your work and the efforts to explain the meanings to us, it is reassuring to know our wishes ”