Second marriages later in life

Protecting your assets

Marriage in general is on the decrease with marriage rates having dropped by half since the 1970s but those aged over 65 have bucked this trend with many marriages in this age group being second marriages.

If you are considering a marriage later in life what factors should be considered and how can trusts help?

When you marry your Will will be automatically revoked. This means that unless you make a new Will your assets will be distributed according to the intestacy rules, which could lead to your new spouse receiving more of your estate than you intended, or to your children becoming disinherited.

Example: George is married to Sarah and this is his second marriage. George has two children from his previous marriage and Sarah has one child from her previous relationship. George’s assets (held in his sole name) total £450,000. George and Sarah own their house, valued at £500,000, jointly as joint tenants. George’s Will made before his marriage in favour of his two children is revoked by his wedding to Sarah and he dies without making a new Will.

Assets in George’s sole name up to the value of £270,000 will pass to his current spouse, Sarah, as will any assets which the two of them own in joint names as joint tenants. So Sarah becomes the sole owner of the house which is owned in this way.

In accordance with current intestacy rules Sarah, as George’s wife, will also receive half of the remainder of George’s assets (£90,000); and the other half (£90,000) passes outright on George’s death to his children. Sarah later leaves all her assets to her child, so disinheriting George’s children apart from the £90,000 received on George’s death.

Balancing provision for your children and for your new spouse

Given that the intestacy rules are essentially a “one size fits all” provision, if you want to make a bespoke provision that reflects your family circumstances and finances, it is essential that you make a new Will after your second marriage, or beforehand in contemplation of the forthcoming marriage. It is far preferable to deal with the situation at this stage than for a family row to erupt between step-parent and step-children following an unexpected death.

Many people in this position find that the best way to proceed is to create a trust in their Will, perhaps allowing the second spouse use of the deceased spouse’s assets during their lifetime, but with the certainty that after the second spouse’s death the deceased spouse’s children will receive their parent’s assets.

Example: George’s Will could create a trust to receive all of his assets that are not jointly owned with Sarah. The trust would provide that Sarah could benefit from the assets during her lifetime, but when she dies the assets would pass to George’s children from his first marriage.

This type of trust would be exempt from inheritance tax on the first death ensuring that any tax bill is deferred until the survivor’s death which may not be the case if the intestacy rules apply.

What about jointly owned assets?

If you own the matrimonial home jointly with your spouse, it may be more appropriate for this to be owned as tenants in common rather than as joint tenants. Owning the home as tenants in common means that each of you can deal with your respective share of the family home in your Will, leaving it to a trust if appropriate. By comparison, if you own the house as joint tenants it will pass automatically to the surviving spouse, and again any children from a previous relationship could lose out.

For example, George and Sarah change the ownership of their house to tenants in common. In his Will, George leaves his share of the house to a trust. As a result, Sarah retains use of the house during her lifetime, but on her death George’s children become entitled to his share in the house. Sarah makes a Will in similar terms to ultimately benefit her child.

You should also consider new nominations in relation to pensions and any death in service benefits. Although these are not assets that pass under the terms of the Will, a nomination will indicate to the trustees of the schemes who you wish to receive the benefits.

What happens if the second marriage ends in divorce?

This is not uncommon and thought should be given to protecting the interests of children from a previous relationship if this were to occur. Recent case law has strengthened the enforceability of pre-nuptial agreements. A pre-nuptial agreement could be a very useful tool for couples with assets over and above the level required to meet the other spouse’s needs, and who wish to ensure certainty that property acquired before the marriage is preserved for their own children in the event of a relationship breakdown.

Preparing for old age

Anyone marrying for a second time should also ensure that they make suitable provision for later life. This should include drawing up lasting powers of attorney to provide for who deals with your financial affairs in later life and for who makes decisions affecting your health and welfare if you become incapacitated. You may wish your new spouse to make such decisions alone, or you may prefer that your children and new spouse share this responsibility. In either case drawing up lasting powers of attorney is the only way of ensuring that you control who takes on this vital role if this is required in your later years.

Contact a specialist Wills solicitor

For advice about putting a Will in place to meet the challenges of second marriages as outlined above, call us now on 0800 652 8025 or contact us online.