The increasing prevalence of the modern "blended family", rising costs of residential care, and the natural desire of hard-working individuals to protect wealth for the next generation have all contributed to us seeing an increased interest from clients in so-called "bloodline wills". But what are they, do you really need them, and what should you consider before making any firm decision?
'Bloodline wills' is an informal term which clients often query with us, perhaps having heard it first in the press or via friends. It broadly describes estate planning measures which seek to carefully limit and control the overall value of wealth passing into the hands of a surviving spouse or partner on the death of the first party in a relationship.
Instead of a straightforward gift of all assets to the surviving partner, care is taken via the wills to ensure that a proportion of the wealth of the first spouse is "ring-fenced" for the "ultimate" intended beneficiaries. Commonly, these "ultimate" beneficiaries consist of members of the next generation, who may possibly (though not necessarily) have been born to a previous relationship.
"Bloodline wills" is not a term of art, and there are not a finite number of "types" of wills. Rather, each will should be drafted in a bespoke way taking in to account the testator's individual circumstances and objectives.
How do bloodline wills work?
As a lawyer qualified in England and Wales, my clients include those with interests south of the border (even if residing long-term in Scotland).
A common starting point therefore involves me considering the manner in which my instructing clients jointly hold the family home and any other property.
In England and Wales, it is possible to change the type of joint ownership you have over a property (even without the consent of the other joint owner) so that it no longer passes automatically to this remaining owner upon death. If you hold an English property as 'joint tenants', this can be converted to a Tenancy in Common, meaning that each owner holds a distinct share of the asset which they can then pass via their will. The process for properties in Scotland is different, but the position can be equally and properly checked by a Scots Law qualified colleague.
In basic terms, once your legal advisors have checked and ensured that your property interests are structured appropriately, each partner/spouse can pass their own distinct share of the property in to a trust created under their will. Any other assets which the individual parties similarly wish to "ring-fence" can also be passed in to the same will trust.
The surviving partner/spouse is generally then given certain rights to the property left in the will of the first party to die, and indeed these rights must be considered and drafted very carefully.
The important point, however, is that the survivor does not inherit the entire property absolutely. Instead, the Trustees of the first will effectively control this 'pot'. If the survivor therefore subsequently remarries, enters long-term residential care, or becomes vulnerable to financial interference, for example, a level of protection is afforded where the assets previously owned by the deceased party are concerned.
It sounds like a "no-brainer", so why would a "bloodline will" not be for me?
Preparing wills of this nature can carry many advantages. However, you should be fully advised upon the legal and administrative responsibilities which will apply to your chosen will trustees, following the first death. The perspective and the future needs of the surviving partner should also be considered given that they will not have completely unfettered access to the trust funds left by the first party.
The powers that you wish to give to your trustees should be drafted according to the provision to be made for the surviving partner/spouse. It is therefore extremely important that a bespoke approach, tailored to your individual needs, objectives and wishes is adopted.
A word of caution
Please do not be tempted to adopt a 'DIY' or ' off the shelf' approach to this type of estate planning. Your particular circumstances are unique, and should be carefully reflected in the particular drafting of any Trust provisions you do choose to incorporate in your will. The consequences of not following such an approach can lead to increased administrative costs and difficulties following the first death. It is also extremely important that the position with regard to jointly owned property is checked (and adjusted as necessary) before the wills are effected.
For clients with property interests in England or Wales, or who are domiciled there, it is vital to consider how English law specifically affects your planning. Our qualifications and expertise in succession planning with assets in both jurisdictions means that we can provide a holistic approach to ensuring your entire estate devolves exactly as you intend.
For further information on any of the issues discussed in this note, please get in touch.