Wills For Married Persons with Young Children
On the death of one spouse, life continues from a legal and tax perspective. Why?
For a married couple in drafting their wills, they have to look at their situation jointly. In these cases mutual wills are drafted and those wills tend to mirror each other.
It is generally the case that a husband will appoint his wife as his executor and leave all his assets to his wife and vice versa. So in the first instance, the surviving spouse will take all the assets of their deceased spouse. There are no taxes between a husband and wife (or civil partners or married same sex couples) and so from a tax perspective in this case, death has no effect.
Legal arrangements will be made to place all the assets into the name of the surviving spouse and the surviving spouse will continue to manage the assets for the benefit of the family and the children under 18 who will continued to be reared by the surviving spouse in the normal way.
So really, if I get this right, for a married couple, the wills only kick in when the last of the two die?
That’s right. In a husband and wife situation, as the survivor of the two will inherit everything, all that really should be considered is what will happen when the second member of the couple dies. That is really where the main provisions kick in. So a husband and wife should draft mirror wills. Generally a husband and wife will want to have similar provisions between them, such as assets passing to their children on their death. As it is unknown who will be the last survivor or if they may die together, the wills will be the same in catering for what happens on the death of the last of them.
Should a husband and wife be in agreement about what happens to their assets on their death.
Generally it is preferable that a husband and wife have discussed matters between them in relation to what they wish to do with their assets. So that their mutual wishes can be honoured. However there can be circumstances where individual wishes or preferences can be catered for.
I have heard of an executor, what is it?
An executor is the person who manages your affairs after your death. They are the person who controls your funds and assets until such a time as they are distributed out amongst your beneficiaries.
My children are young. What happens if we both die?
As your children are under 18, special considerations must be given in the event that both you and your spouse have passed away. There is a tried and trusted method of dealing with this circumstance known as the discretionary trust. The assets of the estate are placed on a trust and managed by the trustees until such a time as the child or children reach maturity. This can be 18, 21, 23 or later whichever the parents or the trustees decide.
Who would be the trustees of this trust?
You get to decide who would be the trustees of the trust. As the name suggests it is someone you trust. So a close friend or family member who has a degree of financial sense or acumen would be a good fit. It is normal that two trustees are chosen and so we recommend that you chose two. They
don’t have to be related but you should be happy that the two trustees can work together and get along.
But who will mind my children when we are gone?
You also get to choose who will mind your children when you are gone. The trustees are the persons who will run the finances. Those persons can be the people that mind and rear your children. These are known as your children’s guardians. You can appoint people different from your trustees as your children’s guardians. Your children will live with your guardians and will be reared by them. If your guardians are different from your trustees, you should ensure that there will be a good working relationship between them.
What happens to our family home and money if were are both gone?
If both parents dies, all of the assets and monies that you now own between you fall into one pot known as the trust. The trustees manage this for the benefit of your children. This will include your family home any other property assets that you have (such as life policies, savings and shares). So all of these monies and assets will then be used for the day to day rearing and needs of your children.
Have we no say at all in what happens to our assets when we die? I thought that was the point of making a will?
The trustees must have discretion to deal with the assets, but you can let trustees know your preferences. So for example, you may have some jewlerey that you would like kept for a particular child or you are hopeful that a child may take over the family farm. All of these individual hopes and desires you have for your assets can be written down and communicated to your trustees in a note or memo. You cannot hamper what the trustees do in the future, but you can put forward suggestions of
what you would like in the future. This is known as a “Letter of Wishes”. The letter of wishes will generally be kept with your will.
Tip 1. No need to treat all children equally.
There is no strict need to treat all children equally although it is understandable why people would wish to do that. However, we normally advise that you look at your asset mix and select assets that suit particular children. So if you have a child living at home and another child living in Dublin and
you have an investment property in Dublin, it may make sense to leave the family home to the child living at home at the property in Dublin to the child living in Dublin. Likewise if you have a child who has an interest in a business or farming then it makes sense to leave the business to that child and compensate other children in other ways.
Tip 2. Do not split up real property (ie houses, apartments, land).
Time and time again we see difficulty with wills where the parents leave a house or a holiday home 5 ways or 4 ways between children. These type of assets are known as real property. It is not recommended to leave these assets between a number of children. This is because each owner has a veto over what can be done with the asset. Therefore, the only dealings that can be done with the assets are where all are in agreement. Further if one of the children pass away, the share of your child may pass to their spouse, or become divided amongst that child’s children, thus further splitting out the shares. So it is better if possible to leave real property assets to one or at most two children at a time.
Tip 3. You can always sell an asset
There is always the option of making provision in your will that an asset will be sold on your death and the proceeds divided amongst your children. This is a way of dealing with splitting up your assets equally.
Tip 4. Flexibility in relation to liquid assets (cash, bank accounts, stocks, shares)
You have a lot of flexibility when it comes to leaving assets such as cash, bank accounts, stocks, shares and the like. These assets can be easily divided amongst your children.
Tip 5. There is no need to list your assets
There is no need to list your assets in your will. Your assets may change over time. One bank account may be closed and replaced with another. You may sell one set of shares and replace them with another investment.
Tip 6. There is no need to mention your children by name
In some cases there may not be a need to mention your children by name. The last clause of a will is normally a clause known as the residue clause. Here the person making the will ensures that nothing is left out and creates a catch-all clause at the end to cover any remaining assets. In these types of cases it is normally to insert a clause like “I leave my remaining estate to my children surviving me at the date of death”. Thus it caters to any unfortunate circumstance where any one of your children may pre-decease you.
For more general information, please check out our Frequently Asked Questions (FAQ). This will give you some further information which applies to all wills including this case.