Case Study: Will for couple with small children

Patrick and Natalie have three young children: twin girls aged 6 and a boy aged 8.  Their circumstances are quite straightforward in that they own a house jointly, have some savings, life policies and a car.

If anything happened to either of them, they would be happy for everything to pass to the survivor of them and, then on the second death or if they both passed away together, they would like all of their assets to be split equally among their three children.

However, Natalie is really concerned about what would happen to the children if she and Patrick both died, and the twins and their son were still young.  She would want to make sure that there was someone organised to look after them and then she would be worried about them receiving their inheritance and not being mature enough to look after it properly.

Possible Solution

In their Wills Patrick and Natalie can appoint someone to act as the legal guardian to their children if something were to happen to both of them.  It is possible to appoint more than one guardian (i.e. it is quite common to appoint a couple) and a substitute guardian can be named who would act if the original guardian is unable or unwilling to act for whatever reason (perhaps due to old age or infirmity).

A guardian appointment expires when the child turns 16 as that is when you are classed as an adult in Scotland (it is 18 in England).  Between the ages of 16 and 18 a guardian can only offer guidance and support to the child.

If Natalie and Patrick have any specific wishes as to how they would like their children to be brought up these can be set down in a separate sealed private Letter of Wishes addressed to the guardian(s) which would not form part of the Wills.

The Letter of Wishes could contain Patrick and Natalie’s preferences as to which school they would like the children to attend, where they should live and what clubs/church they should be encouraged to attend.  Of course, nothing in the Letter of Wishes is legally binding upon the guardian: it is simply there to offer guidance.

As children become adults at the age of 16 in Scotland, they are entitled to receive any inheritance due to them at that age.  It can be a source of concern to parents (and grandparents) that young members of the family could have what may be a substantial amount of cash handed over to them at such a young age.

Fortunately, it is possible to prepare Wills to include trust provisions to effectively postpone the age of inheritance until a beneficiary reaches an age with which the person making the Will feels more comfortable.  Patrick and Natalie could, therefore, decide that they would be happy with their children receiving their inheritance when they each respectively attain the age of 25.

If (fingers crossed) the children are older than 25 when the second of Patrick or Natalie passes away, a one-third share of the estate would pass outright to each of their two daughters and their son at that point in time with no need for the trust to come into effect.

The Trustees of the Will would look after the inheritance “pot” for the benefit of each child until he or she attained the age of 25.  Funds could be paid out early if the Trustees felt that it was for an appropriate purpose (i.e. paying tuition fees for college or university or funding a deposit on a first property) but the children would not be able to demand that any payments were made to them while they were under the age of 25.

It is therefore very important that Patrick and Natalie choose people who they trust to use their judgement wisely when looking after their children’s inheritance and deciding when money should be advanced to them before their respective 25th birthdays.

 

Letter of Wishes

A Letter of Wishes can contain wishes that you want to pass on to the guardian(s), including which school you would like your children to attend and what clubs/church they should be encouraged to attend.

Couple with Young Children

Quick points

If Natalie and Patrick have any specific wishes as to how they would like their children to be brought up these can be set down in a separate sealed private Letter of Wishes addressed to the guardian(s) which would not form part of the Wills.

  • Appoint someone to act as a legal guardian
  • You can appoint more than one person or substitute guardian
  • You can put any specific wishes into a separate sealed private Letter of Wishes
  • Trustees of the Will look after the inheritance pot for the benefit of each child
  • You can postpone the age of inheritance so that children don't inherit an estate at 16
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