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The type of will that is most commonly held is called a mirror will. This means that after death, the assets are transferred to the spouse. Even though it’s a belief held by the majority of people, that making a will enshrines your wishes in stone, in reality nothing could be further from the truth.
With a traditional or ‘mirror’ will in place, your assets are exposed to a number of risks when one spouse dies.
- Creditors/Bankruptcy – If the surviving spouse is subject to creditor claims/bankruptcy, the inherited estate is fully at risk.
- Marriage after death – On first death, all the assets are solely owned by the surviving spouse. In the case of this spouse re-marrying, the inherited estate could be lost to the spouse, leaving your children disinherited.
After second death, things get even more complicated.
- Divorce – If your children/other beneficiaries are involved in divorce proceedings, HALF of what you intended them to receive is at risk of divorce settlements.
- Generational Inheritance Tax – Once your wealth has passed to your beneficiaries, it becomes part of their estate. Upon their death, this estate will be taxed at the same rate as your original assets. This means that your assets can be taxed twice!
At Protection Practitioner, we can offer an alternative way to manage your assets after death, in the form of a trust.
When a trust is implemented, after death, the assets in the trust do not add to your beneficiaries estates. This effectively ensures that the assets in the trust cannot be affected by claims of bankruptcy, and in the event of a second marriage, the new spouse cannot gain access to the assets in the trust. This adds further protection to your children or other beneficiaries after your death. A trust also prevents your assets from being taxed a second time with the use of Inheritance Tax.
If you would like more information on implementing a trust to protect your assets, or you would like to discuss your current death planning solution, please get in touch with Protection Practitioner. Please remember that estate law can be complicated, and do not to be tempted to use this article as advice for any personal planning. Each strategy recommended is based on individual circumstances.
Click here to read more about why making a will that enshrines your wishes is so important!
Trust law is complicated. To make sure you get things right, it’s vital to get professional advice before setting up a trust. Always talk to a solicitor or an estate planner . For any guidance on your SSAS Pension Scheme , Asset protection and Inheritance Tax , get in touch with our friendly team of SSAS and Asset Protection experts, we’d love to help.