Modern Family

As we emerge from the second lockdown, it got me thinking about my latest pastime – watching ‘Modern Family’ by HBO!

I have become immersed in the trials and tribulations of their family lives. This got me thinking about the ways in which I help many modern famil­ies with their wills and estate planning.

‘Modern Family’ follows the daily lives of three families.

Family one – The dad Jay is married to Gloria and has two adult children (Claire and Mitch) from his first marriage, a stepson (Manny from Gloria’s first marriage) and one young child (Joe) with Gloria. Jay has retired from the family business and Gloria is training as an estate agent to work alongside Phil.

Family two – Claire is married to Phil and has three children (Hayley, Alex, and Luke) and two grandchildren. Claire has taken over running the family business from Jay and Phil runs his own estate agency business.

Family Three – Mitch is in a same sex marriage with Cameron and they have an adopted daughter Lily. Mitch is a lawyer and Cameron is a football coach at a school.

I have become immersed in the trials and tribulations of their family lives. This got me thinking about the ways in which I help many modern famil­ies with their wills and estate planning.

‘Modern Family’ follows the daily lives of three families.

Family one – The dad Jay is married to Gloria and has two adult children (Claire and Mitch) from his first marriage, a stepson (Manny from Gloria’s first marriage) and one young child (Joe) with Gloria. Jay has retired from the family business and Gloria is training as an estate agent to work alongside Phil.

Family two – Claire is married to Phil and has three children (Hayley, Alex, and Luke) and two grandchildren. Claire has taken over running the family business from Jay and Phil runs his own estate agency business.

Family Three – Mitch is in a same sex marriage with Cameron and they have an adopted daughter Lily. Mitch is a lawyer and Cameron is a football coach at a school.

What issues are each family presenting?

1. All three families have children under 18. This requires us to advise them on the appointment of guardians in their Will.
2. The dad has children from two marriages and may want to look at the use of a life interest trust to provide for his wife, his children, and his stepson.
3. The daughter needs to think about succession planning for the family business as well as how she wants to provide for her husband, children, and grandchildren.
4. Depending on each family’s financial situation they may need to have regard to inheritance tax planning.

Guardians

There are many assumptions around guardians, and it does not always follow that the surviving parent will be the person to continue caring for your child.

In the case of the child’s mother, she will always be able to continue to care for the child or children, however for the father of the child this may not be true.

Whether the child’s father can continue to care for the child after the death of the child’s mother will rely on whether the child’s father has Parental Responsibility. To determine this, you need to look at when the child was born and the relationship between the father and mother.

For the families above, Mitch and Cameron have adopted Lily so both have parental responsibility by reason of the adoption order.

This is a specialist area and one of our team would be able to look at your circumstances and confirm whether the child’s parent has Parental Responsibility and how to cater for this in a Will.   

Life Interest Trusts

Incorporating a life interest into your Will is an effective means of balancing the competing interests of the long-term financial security of your second spouse against the longer-term inheritance of your children from a previous relationship. Such an arrangement will often confer a right on the surviving spouse to occupy the matrimonial home and may also include the right for them to receive investment income from any invested trust funds. Typically, this arrangement will also confer flexible and discretionary powers on the trustees to advance capital to the surviving spouse in specific circumstances.

Succession Planning for a Business

The starting point here is to check the constitutional documents of the business. In the case of a limited company this will be the articles and memorandum of association, and any shareholders agreement. For a partnership this will be the partnership agreement. These documents need to be carefully checked to establish what existing agreement is in place to regulate who receives the deceased’s person’s interest in the business.If the documents are silent on this, then the statutory rules will be implied. Our company and commercial department can offer advice on this and arrange for the company papers to be amended to include any relevant succession planning agreements.

Once the company papers are in order then each individual in the business can focus on their Will and leaving their share of the business to their families. Depending on the nature of the business, it may qualify for Business Property Relief (BPR) from Inheritance Tax. If the tests for qualifying for BPR are met, then the use of a discretionary trust to hold the business assets may be appropriate as a tax planning tool. This will shelter the assets and ensure that BPR is fully utilised.
This is a specialist area and one of our team would be able to look at your circumstances and confirm whether your business qualifies for BPR and how to cater for this in a Will.

Inheritance Tax Planning

Making a Will and looking at Inheritance Tax go hand in hand. There are various tax reliefs and exemptions which interact with each other, such as the transferable nil rate band between spouses.Tax needs to be borne in mind when drafting a Will to ensure that the way the Will is structured takes maximum advantage of the available tax thresholds and reliefs.

In the above examples, in Family one, if Jay’s first wife had died and he was a widow when he remarried Gloria then his estate has the opportunity to use two transferable nil rate bands. One from his first wife and then a second from whoever dies first out of himself and Gloria.

We able to look at your circumstances and confirm what Inheritance Tax reliefs apply to your estate and how to cater for this in a Will.

More information

Our Private Client Team have been recognised as one of the leading private client departments in the region by Legal 500 UK, and are able to prepare a Will and Lasting Power of Attorney for you that reflects your personal wishes and requirements.

In addition to these services, we also offer related expert estate planning, tax and trust advice.

This article was written by Claire Buttress, Senior Associate in our Private Client Team. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of December 2020.