Q: I recently had a health scare which has made me think about who will inherit my money when I die. I really want to leave everything split between my daughter and my son. I am concerned, however, that, as my son is recently divorced and still has not concluded the financial settlement of the divorce, his ex-wife will be entitled to part of his inheritance. I am sure she is refusing to settle the financial side of their divorce because of my ill health. Is there any way I can ensure that only he will benefit?
A: In this scenario some parents choose to benefit one child on the understanding that they will provide for the divorcing child. However, such an arrangement would be based upon trust alone and there would be no legal obligation upon the other child to make such provision for their sibling.
Alternatively, you can provide for your son by way of discretionary trust rather than gifting assets to him outright. By providing for your son in this way you can name your son and others (for example grandchildren) as beneficiaries and leave it to the discretion of your executors/trustees to distribute your estate amongst those beneficiaries as they see fit.
Your son would not automatically be entitled to the assets and would only become entitled if the trustees exercised their discretion in his favour, so that any claim his ex-wife may have against the estate should be limited. Your son would, however, be required to disclose his interest in the trust in any financial settlement following his divorce. Nevertheless, providing for him by way of trust rather than an outright gift would still be advisable.
There are also many other factors you should consider before creating any type of trust. It is therefore essential that you take appropriate professional advice before proceeding.
01/03/2016
