One of the biggest issues people have faced during the lockdown is childcare for blended families. A blended family is where a couple may have children from a previous relationship living with them. This global pandemic has made a lot of couples think about the future if one of them passes away. How can you guarantee a secure future for your children and surviving partner?
Of course, this is a complicated and difficult subject to approach; but a very important one, too. Here are some of the ways to safeguard the future of loved ones in the event of someone’s passing.
How to Plan for the Future
One of the first things people will think of is to create a will. A legal will ensures a person’s assets are passed to the deceased chosen recipients. If a will is not created, the intestacy rules will apply to inheritable assets. During the lockdown, wills can be created or updated remotely.
One of the most valuable assets someone will own in their life is property. If someone is joint tenants with their partner, upon death, the surviving partner will automatically assume the other 50% share. For someone with a child or children from a previous relationship/s, this may not be an ideal scenario.
An alternate option to this is to become Tenants in Common and to have a Declaration of Trust. This sets out the proportion of property each person in a couple will own, which can be ringfenced for children or other beneficiaries. The share of the property inherited can be based on how much each party has contributed to the property. Even during the lockdown property ownership stakes can be changed remotely. This is through the Land Registry.
Life Interest Trust
In the event of someone’s death, they can specify that their partner can remain in the property forever. As well as any time in between, the options are fluid and up to the discretion of the departed. When a life interest trust ends, the share of the property is transferred to the beneficiaries named in their will.
This is the same principle when dealing with property rental. The will can also state that someone’s income can be passed to a surviving spouse or civil partner for a fixed time. Unfortunately, COVID-19 has not only caused a public health crisis, but it has also caused an economic crisis. This is why ensuring any surviving family has the right financial support is vital.
For any kind of trust, there is the added factor of inheritance tax. For someone to ensure their assets are protected and they’re paying the right amount of tax, it’s vital to talk with a specialist. For example, if someone owns and leaves property over £325,000 to a partner, they will have to consider inheritance tax.
This will be different if the person leaves a share of their property to direct descendants. The residence nil-rate band (RNRB) will apply in this case. This will result in an additional £175,000 of tax-free allowances, which will depend on the size of the estate being inherited.
Lasting Powers of Attorney
During the COVID-19 crisis, many people are making the tough decision on who to choose as an attorney. This needs to be someone they trust in case they lose their capacity to make clear choices. A lasting power of attorney can make financial and welfare decisions on the behalf of the indisposed party.
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