MONEY MATTERS: How much and when … (if anything)?

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Harry stared out of the window, seemingly watching the rain dribbling down the window pane.

His wife called out, “Harry, come and sit down – it’s only money – we don’t need it, we’ve got each other and Emily”.

Harry pulled away from the window. “I know I shouldn’t stand and stare; it’s not going to do any good. It’s not just money though – it was Dad and Mum’s money – it was meant for us, or at least half of it anyway. It seems so unfair!”

Harry’s mother had died 10 years previously. His father Jack had re-married, and his new wife had a daughter of her own.

So, when the now married couple wrote their Wills, they opted for cheapness and drafted a basic Will.  The terms of the Will left everything for each other; if not, the estate was to be split between both children.

Harry moved out of the family house to start his own family. Even though he had a good job, they still had to watch every penny.

Later his father, Jack, died.

Harry met his stepmother at the funeral and they mourned together.

Years later his stepmother died. When her Will was made public, it appeared that she had re-drafted her Will and left everything to her daughter.

Harry was in shock, after all most of the value of the estate was made up of assets that had belonged to his father, so how was it possible that he had been excluded from the estate?

It’s a very familiar story to me; I have heard many such stories over the years. It’s not necessarily the loss of money alone, but the unfairness of not receiving what you believe is rightfully yours.

The unfairness grates and rubs away at your soul; many take this bitter feeling to their graves.

We find a large proportion of Wills and other legal documents are drafted with naivety; the financial consequences are often not thought through.

Little consideration is given to possibility and financial consequences of divorce, not just for the people who are drafting their Will but for their sons and daughters. Why is this, when divorce is running at about 50% in these modern times.

As a highly experienced financial planner, I have managed to assist many of my clients to create wealth, only to see some of them blow it way by having poorly written legal documentation.

I presume not many people would be too happy to see the following phrase in their Will:

To my son-in-law from hell, I am happy that you will receive 50% of the assets I passed to my lovely daughter on my demise since you are now divorced and have claimed your share.

Many of the problems that poor Wills throw up could be avoided by setting up trusts independent of the Will; these can be used for protective purposes or for lifetime gifting. You may have heard that family trusts are expensive to set up. Years ago, it did cost a small fortune to establish family trusts, but they are affordable now.

When you pass and leave survivors, it’s normal to wait for probate before monies can be distributed.  If you had established a trust – it is often possible to arrange an almost immediate pay-out, tax-free.

For a more in-depth explanation of trusts, read chapter 11 of my 259-page book Inheritance Tax Simplified.

Wills Tax & Trusts


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