Around one third of parents are unwilling to leave an inheritance to their children or provide them with financial aid, as they are concerned a future divorce may mean that money leaves the family.
This is according to research from ‘Investec Investment & Wealth’, which found that 14% of parents had little or no confidence that their children’s marriages would last a lifetime.
It is perhaps an understandable concern, with around 42% of marriages failing, according to the Office for National Statistics.
There are steps you can take, however, to ensure that your money ends up in the right hands without disinheriting your children – irrespective of how successful they might be at finding a long-lasting partner.
Make use of your annual gift allowance
The research found that one in six parents are opting to give their loved ones small financial gifts to help with the cost of living, rather than large lump sums.
It’s important to remember that everyone has a £3,000 annual gift allowance, covering financial gifts you can hand over each year, free of inheritance tax. On top of that you can give away up to £250 to any number of other beneficiaries each year.
Skip a generation
According to the research, around 14% of parents are skipping a generation and instead looking to leave assets to their grandchildren, often making the gift conditional on them reaching a certain age, and having proven themselves capable of managing their own finances.
Put it in Trust
The study found that one in seven parents are considering putting the money into a Discretionary Trust, which could be a useful way to protect money from a potential divorce.
With a Discretionary Trust, it is up to the Trustees to determine who, how, when and how much a potential beneficiary receives from the Trust. You can act as the Trustee yourself during your lifetime, so that you have final say over where the money goes, or you can appoint an independent Trustee to act before or after your death.
What’s more, depending on the amount held in the Trust and when it was put in Trust, in many cases it will be free of Inheritance Tax.
It’s important to consider and review how you would wish your assets to provide for your loved ones, and get those wishes down in the form of a comprehensive Will.
Heir Tight Wills helps clients understand the options for their estate planning provisions, to ensure their assets go when, where and how they intend them to. For a FREE Consultation to discuss writing or updating your Will & estate planning provisions, contact Rachael Rodgers on 0845 519 7585, or CONTACT US via email.