Divorce has become more widespread around the world. And the toll of the pandemic, in recent years, has added more strain to relationships.
While divorce can be a major source of stress at the time, affecting people's mental, physical, and financial health, the long-term consequences can often create blended families, which come with another set of considerations.
Families today often comprise a mix of biological and non-biological parents and children, stepparents, stepchildren, half-siblings and even grandparents.
So where does that leave you when thinking about how you split your estate between all the people you love and care for? Read on to understand more about how to approach your estate planning if you have a wonderful big, blended family to consider.
1. Write or update your will
Having a valid will is a crucial part of your estate plan and will help ensure that your financial assets and possessions will be distributed according to your wishes.
Essentially, only married or civil partners and, potentially, other close relatives, can inherit under the rules of intestacy. So, if you die without a will in place and are still married to your ex-partner, they could stand to gain over your new partner.
If you’re living with your new partner but aren't married or in a civil partnership, the person you love and share your home with can't inherit unless you've expressed your wishes formally in a will.
As a result, when you separate, it's crucial to write a will, or update your existing one.
According to recent figures from Canada Life, 29.6 million people in the UK don’t have a will. If you’re one of them, make sure you make this a priority. Writing a will needn’t be complicated and, typically, cost relatively little to sort out.
2. Decide how to divvy things up
Another important reason to have a will in place is that when you die, unless you set out your wishes in a will, your surviving partner can do what they like with assets that are left. A common situation that arises because of this is that children from a first marriage often miss out when assets are divided.
When you write your will, take the opportunity to set out who will get what and, if necessary, consider adding a letter of wishes to explain your decision.
A little extra time and thought now could help avoid a situation where some parties feel unfairly treated or excluded.
3. Consider giving a living inheritance
If you have sufficient assets, you may want to think about giving your children a living inheritance.
Passing on your wealth before you die can help your children when they need it most and help to ensure that they receive what you'd like them to have. Plus, you get the added benefit of seeing them enjoy the money while you're still around.
Another potential benefit of gifting money is that it can help reduce Inheritance Tax (IHT), so more of your wealth goes to your loved ones, instead of the tax office.
4. Set up trust funds
A trust can be useful if you want to pass your wealth to your loved ones while maintaining a degree of control. The legal arrangement allows you to set aside assets, such as cash, investments, or property, for one or more beneficiaries.
Trusts can be a great way to retain a degree of control over how assets are used and can help create a long-term legacy. To ensure your wishes are carried out, it’s crucial that a trust is set up properly and that you take some time to consider what you want the trust to achieve.
This can be a complex to navigate, but we’re here to help answer any questions you have. Whether you want to understand if a trust could be suitable for your plans or need to make changes to an existing trust, please get in touch.
5. Think about your long-term goals
There's a lot to take into account when tackling your estate planning. If you have a large, blended family there’s likely to be more people you wish to consider when setting out your wishes.
Take your time to think hard about your goals and objectives when deciding how to provide for all your loved ones, including your spouse, biological children, and stepchildren.
Once you have a clear idea of what you want to achieve, setting out a plan to ensure your wishes are met should be that much easier.
Remember: different rules apply in different countries, and states. And this one of the areas where our expert advisers can help.
Get in touch
We provide specialist advice to British expats and international employees living around the world. So, if you’d like to protect your estate from IHT and ensure your assets are divided fairly between all the people dear to you, please get in touch.
Email us at firstname.lastname@example.org or give us a call on +44 1689 493455.
The content of this newsletter is offered only for general informational and educational purposes. It is not offered as and does not constitute financial advice.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.