Wills and Trusts for Blended Families

Wills matter for everyone, but they matter particularly if you are part of a blended family, where one or both of you has children from a previous relationship, and perhaps children together as well.

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The difficulty is that the most common arrangement, while perfectly sensible on paper, may not do what you think it does.

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The problem with mirror wills

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Many couples make mirror wills. Each leaves everything to the other, and they agree in advance how the estate will be divided once they have both died. The first to die leaves everything to the survivor, and on the survivor's death the estate is divided between all the children in the shares the couple agreed.

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The difficulty is that when the first person dies, the survivor can change their will. There is nothing you can do about that, and it is not a question of trust. Circumstances simply change. Your surviving partner may remarry, may have further children, or may take on new responsibilities. They may want to provide for new stepchildren. Any of that could mean your children receive less than you intended, or nothing at all.

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If that concerns you, it is worth considering something more sophisticated than a standard mirror will.

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Leaving money in trust

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You do not need to set up a trust during your lifetime. A trust can be created by your will and comes into effect on your death.

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In a marriage or civil partnership, each of you has your own share of the estate, and there is no requirement to leave your share on the same terms as your spouse or partner leaves theirs.

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One common approach is a life interest trust. Your share passes into trust for your surviving partner, who is looked after for the rest of their life. On their death, the capital passes to your children, whether from a previous relationship or from more than one. Your partner can make a similar arrangement so that their own children are equally protected.

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This also has a practical benefit. If your surviving partner later needs residential care, or remarries, your share has already been directed towards your children rather than forming part of your partner's estate.

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Discretionary trusts

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The alternative is a discretionary trust, where your trustees decide who receives what, and when.

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This gives real flexibility. Trustees can protect part of the estate where a surviving spouse goes into care. They can hold back funds from a child who is not good with money until they are better placed to manage it. They can protect assets where a child is going through a difficult divorce or facing bankruptcy.

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You choose your executors and trustees, so you decide who will be making those judgements.

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Your letter of wishes

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You do not have to decide everything now. Alongside the trust in your will, you prepare a separate letter of wishes explaining to your trustees why you set the trust up and what you would like to happen.

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Your trustees retain discretion to do what is right at the time. None of us can anticipate everything that might happen in ten or twenty years, and that flexibility is the point.