What is ‘Sideways Disinheritance’ and How Can You Avoid It?
Sideways disinheritance is when your estate moves ‘sideways’ after your death, rather than down through the generations. This usually happens due to remarriage, with the effect being that your children are accidentally disinherited. It can be avoided by including a Life Interest Trust in your Will.
The sideways disinheritance trap explained
Lots of couples decide to leave everything to each other in their Wills, with the children inheriting everything after the second person has died. This is a good idea in theory. However, a number of factors can derail this plan, causing your children to be left out altogether.
Firstly, let’s imagine Amy and Ben, a married couple who have children together. Ben dies first, meaning the entire estate falls into Amy’s sole name. Amy then gets remarried, invalidating her current Will. If she fails to make a new Will, then her new spouse will inherit the lion’s share of her estate (which by now includes Ben’s estate too). Her new spouse takes all the money for himself, as he is legally entitled to do. The children are left with nothing.
But what if Amy makes a new Will? She states that her new spouse should receive everything, and after the second person’s death the remaining assets should be distributed evenly between their children. However, if Amy dies first, then there’s nothing to stop her new spouse from changing his Will. By now, he’s received all of Ben and Amy’s estates. He writes Amy and Ben’s children out of the equation, instead leaving everything to his own children.
Secondly, let’s imagine Gary, who has children from a previous relationship. He then marries Fiona. As explained above, this invalidates his Will, meaning Fiona will inherit most of the estate under the intestacy laws. But if Gary makes a new Will, then he has a difficult decision to make. Should he leave everything to his children, potentially leaving Fiona destitute after his death? Or should he leave everything to Fiona, who could then rewrite her Will after his death to exclude his children? Instead, her own family would benefit from Gary’s wealth, which is never what he intended.
Life Interest Trusts
To avoid the sideways disinheritance trap, you need to make sure that you have professionally written Will in place at all times. This should be updated after any major life events, particularly after marriage, which invalidates your existing Will.
You should also investigate the use of Trusts to protect your assets and your beneficiaries. One option is to include a Life Interest Trust in your Will. This places all your assets into a Trust after your death. They are ring-fenced for the beneficiaries named in your Will, such as your children. However, you can then name a Life Tenant. This person can continue to live in your property, and generate income from your assets, until their death (or until he/she remarries).
A Life Interest Trust would be an ideal solution for a couple such as Gary and Fiona. Gary can still leave all his assets to his children, but Fiona can continue to live in his property for the rest of her life. Gary is therefore able to take care of all his loved ones, but without his estate accidentally moving sideways to Fiona’s family.
Life Interest Trusts also have other benefits. The assets held in the Trust cannot be taken into account when the surviving spouse is assessed for care home fees. It also protects the assets from divorce and bankruptcy proceedings.
We understand that families are complex. We can discuss how best to proceed in your particular situation. There are various tools at our disposal. We can apply our legal expertise to make sure the right people inherit from your estate, while at the same time protecting your spouse or partner.
If you would like to make or update a Will, please call us on 0191 567 7244 and we’ll be happy to help you. If you would rather contact us online, email us at email@example.com and one of our team will be in contact with you shortly.