How our assets are divided after we pass away will never be the most enjoyable of topics to discuss, but it's incredibly important that we make sure everything is planned exactly as we want it so that we can live content in the knowledge that everything will be taken care of.

When it comes to dividing assets between children from a previous relationship, there are a number of ways to go about doing this. If there are assets other than the family home, one option may be to simply divide everything between your spouse and the children as you see fit. However, in many cases, most of the assets happen to be tied up in the family home, or the surviving spouse may need the assets to live on. In these instances, a life interest trust outlining some or all of the assets can be assigned to the spouse with the children eventually receiving the capital on the death of the spouse.

Life interest trust

Choosing to set up a life interest trust for the surviving spouse would give them the right to receive income, such as interest on investments or rental income from properties, as well as the right to occupy a property following your death. The life interest trust runs for the remainder of their life, so it would mean the children would receive their inheritance following the death of the spouse - the underlying capital is completely protected for them and cannot be distributed to anyone else or for any other cause post death.

Discretionary trust

An alternative option would be for your will to include a discretionary trust, which can create flexibility with the division of the inheritance as it will enable the trustees, who you should ensure are very carefully selected, to take into consideration the needs and circumstances of the named beneficiaries at the date of death before deciding what each beneficiary should be entitled to as their portion of the inheritance.

Impact on tax through division of assets

It's important to note that there are tax consequences with each option, so you should carefully research these and consider discussing them in detail with a financial expert. Of course, you shouldn't use the impact of taxes or potential tax savings to solely base a decision on how you execute your will, but it's worthwhile educating yourself as tax effects may still be an important feature in deciding how to divide your assets between tax exempt and non-exempt beneficiaries.

Due to potential conflict, it might make sense to appoint neutral executors and trustees to administer the assets and ongoing trust. Neutral lay executors are not always the easiest to source, so a professional executor such as a solicitor may be a good option for you to consider.

If you'd like to discuss your will in more detail, have a contentious probate matter or would like to learn more about any of the other legal services that we offer here at Fonseca Law, don't hesitate to get in touch with our expert team of solicitors. You can contact us by calling 01495 303124, e-mailing enquries@fonsecalaw.co.uk or by completing our online contact form.