“I Do” x 2 – succession planning on second marriages
In October, the Office for National Statistics reported that last year’s UK divorce rate increased from that on the previous year and I think it is safe to say that a healthy proportion of divorcees are entering into subsequent marriages.
In fact, I recently read an article depicting financial “doom and gloom” and family chaos for all those choosing to get married later in life, especially where children from previous relationships are involved. Although remarriage can pose both personal and legal challenges, if tackled head-on there is no reason why individuals who genuinely love each other should be discouraged from finding happiness in marriage again.
Without question, a Will must be updated on divorce or re-marriage. It is not widely known that a Will is revoked by a subsequent marriage (unless specifically made in contemplation of that marriage) or that a divorce has the effect of deeming an ex-partner as having died at that date for inheritance purposes.
A common myth associated with succession on second marriage is “If I leave everything to my current spouse or civil partner, perhaps for tax reasons, then any children from a previous relationship will not benefit from my estate.”
In many cases, this is completely untrue.
There are certain tax advantages to leaving everything to a surviving spouse or civil partner; however, there are also carefully drafted provisions which can be placed within an individual’s Will to benefit a current spouse or civil partner (and receive the tax advantages) and also children from a previous relationship. Some options include: cash gifts, legacies of specific items or a life interest trust.
Moreover, despite individuals having “testamentary freedom” (i.e. the ability to include or exclude whomever they choose) when drafting their Will, they do have a legal obligation to consider and provide for certain family members. For instance, if children are “cut out” of a parent’s Will, they will likely have a claim under the Inheritance and Family Provisions Act 1975. Couples who have been together for some time but whom are not legally married may also have a claim against each other’s estates.
It is therefore important to ensure that one’s Will is always up-to-date, especially before or after major life events, such as divorce or marriage. The key is to not postpone in seeking professional advice, as every situation is unique and there can be unsavoury consequences if not dealt with during one’s lifetime.
If you would like more information on any of the above issues or your estate planning in general, then please do get in touch with Elysa Jacobs in the Succession & Tax team.