Case Study: Second marriage joint assets

Graham and Anne are married and own their property jointly.  Both have been married before and have children from their first marriages but no children together.

Having invested a lot of their respective funds into the purchase of their home, at the end of the day, Graham is keen to ensure that his wealth will ultimately pass to his children and, likewise, Anne wants her children to receive her assets.

However, at the same time, neither wishes the other to be forced to leave the house if one of them dies as it is the home that they have made together.

Possible Solution

Graham and Anne can make Wills which leave their respective shares of the property to each other in “liferent”.

This essentially means that the one-half share of the property belonging to the spouse that passes away first will be held in trust for the survivor to “use” but not actually inherit.

If Graham dies first, Anne will be able use Graham’s share and therefore live in the property for as long as she wishes or until her death or until she is no longer mentally or physically able to stay there.

Provision can also be made for an alternative property to be purchased and the original property sold if it becomes an unsuitable place for Anne to live (i.e. through old age or infirmity).

The important point is that Anne will not own the share of the property which belonged to Graham.  Instead, she will have a right to use it for the remainder of life or for as long as she wishes or is able to make use of it.

If Anne then dies or needs to move into care or simply does not want to benefit from the liferent anymore, at that point in time the liferent trust will come to an end and Graham’s one-half share of the property will pass to his children (and Anne’s one-half share will pass to hers).

The benefit of having a liferent trust in Graham’s Will is that it clearly specifies the ultimate recipients of the underlying asset but still allows Anne to benefit from it without the fear that her step-children will try to realise their father’s share of the house until the liferent trust comes to an end.  This would, of course, equally apply if Anne passed away first.

Liferent

This essentially means that the one-half share of the property belonging to the spouse that passes away first will be held in trust for the survivor to “use” but not actually inherit.

Graham and Anne

Quick points

The important point is that Anne will not own the share of the property which belonged to Graham.

Instead, she will have a right to use it for the remainder of life or for as long as she wishes or is able to make use of it.

  • make Wills which leave their respective shares of the property to each other
  • provision can be made for an alternative property to be purchased
  • partners will not own the share of the property which belonged to the other partner
  • clearly specifies the ultimate recipients fo the asset
  • allows benefit from it while surviving partner is alive
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