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Ask Clare Your Own Question
Clare, Family Solicitor
Category: Family Law
Satisfied Customers: 34900
Experience:  I have been a solicitor in High Street Practise since 1985 and have specialised in Family Law for the last 10 years
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How to protect future inheritance from divorce by creating a

Customer Question

How to protect future inheritance from divorce by creating a trust for benefit of children
Submitted: 1 year ago.
Category: Family Law
Customer: replied 1 year ago.
my mother is a widow wants to keep her money within the family when she dies which is quite likely to be soon as she is 92 and in bad health but she does not want it to become subject to divorce from my estrange wife and wants to leave it on trust or find some other way of ring fencing it if need be for the grandchildren on trust
Customer: replied 1 year ago.
she also does not want grand children who are 21 and 17 to receive all at once and her preference is to leave to me and her other son but in ways that protect it for the ultimate benefit of my 2 sons
Customer: replied 1 year ago.
If i started divorce proceedings before she died would that achieve this aim?
Customer: replied 1 year ago.
i am based in england
Expert:  Clare replied 1 year ago.

Thank you for your question

My name is Clare

I shall do my best to help you but I need some further information first

How long have you and your wife been separated?

What marital assets are there?

Customer: replied 1 year ago.
We are estranged but not separated. Been married five years. I brought a share of a 4 bedroom bungalow to the relationship, She brought no assets. I "traded" the bungalow for a cafe with integral flat above where we live with my 17 year old son. The cafe has been massively improved with an extended 50K loan from the bank which originally financed the purchase of the property with a loan of 135K in 2013 (reduced to 125 meaning that the total debt is 175KMy mother does not want her inheritance to me to be caught up in any financial settlement on sparation or divorce between us and has asked me to find a way to achieve this she is 92 years and in bad health.I want to explore her creating a trust for my two sons 17 and 21 with myself as trustee so that beneficial ownership never comes into the family assets for possible division on divorce but without giving the boys a dangerously large sum at any early age.She inists that the family money remains in the family itself. I am about to retire with a lump sum of 69K and severance sum of 59K. There is also a mobile home of 18K. Her cafe business is fair with around 30 K profit each year but she and myself have sunk our monies into the improvements to the cafe and the creation of a flat in the basement of our 3 story building.
Expert:  Clare replied 1 year ago.

How much is the marital property worth and how much is outstanding on loans?

Customer: replied 1 year ago.
Hello Clare - i think my key question concerns not the general situation but how can my mother revise her will to absolutely ensure that her inheritance to me does not become part of the family assets for division on divorce but is for example held by me on educational trust for my sons only, how does she revise her will to do this, or is there some other way of ring fencing an inheritance, perhaps to my sons but on strict conditions that they only derive an income from an investment so that they cannot go crazy with a massive lump sum?
Michael.The property is worth about 300,000 there is 175K outstanding on loans, with some 20K in savings being used to further improve the property creating a flat out of a basement.
Expert:  Clare replied 1 year ago.

Then just to check - if the divorce issue was not a problem would you still prefer that the money went to your children rather than you?

Customer: replied 1 year ago.
No i would prefer come to me directly then i would filter it out to kids slowly when they needed it perhaps investing some of it and using interest for kids.My mother is adamant that the inheritance stays in the family "bloodline" alone and regards ***** ***** as a gold digger who is scamming me for what she can get,My first preference is that inheritance comes to me as wholly ring-feanced from later divorce settlement, but if this is not possible to create a trust say or some other device that stops it ever becoming classified as family assets available for distribution on divorce. The third possibility is that i simply get disinherited by my mother!
Customer: replied 1 year ago.
how about a secret or semi secret family trust where the legal title of the inheritance money goes to one of sons but with the beneficial ownership held on trust for myself and his brother only
Expert:  Clare replied 1 year ago.

And that is why I need details of the marital assets to see how to protect the inheritance for YOU

Customer: replied 1 year ago.
Ok thanks I get it - the building with flat and cafe business is worth about 300-350K combined (bought about 4 years ago and massively refurbished and rennovated and extended with joint monies; existing joint savings about 15K, mobile holiday home I bought with son alone 18K. No other assets. Pension due end of aug about 20K per year, and a one offer pension lump sum or 67K plus 59K severance payment from my employer. .Nothing else of value.
Expert:  Clare replied 1 year ago.

And there is a mortgage of £175K?

Customer: replied 1 year ago.
at the moment its a business bak loan because the property is semi commercial
Expert:  Clare replied 1 year ago.

How much are you likely to inherit?

Customer: replied 1 year ago.
around 300K of an estate worth 600K split with my brother
Expert:  Clare replied 1 year ago.

How long have you and your wife actually lived together? (married or not)

Customer: replied 1 year ago.
five years from April 2011 married october 2011
Expert:  Clare replied 1 year ago.

Are you willing to divorce at this stage?

Customer: replied 1 year ago.
soon yes its inevitable but i need to safeguard mothers inheritance first if possible
Customer: replied 1 year ago.
if need be by a trust for kids giving them regular income and to keep it out of family assets divisible on divorce
Expert:  Clare replied 1 year ago.

In fact if there is a divorce now there is little need for anything particularly complex to be put in place.

So is a divorce this year a possibility?

Customer: replied 1 year ago.
it is but if my mother dies soon which is likely won't the inheritance be counted as family assets to be divided 50 / 50
Expert:  Clare replied 1 year ago.

NO in fact that is not necessarily the case.

Yours is a short to medium length marriage and there are substantial other assets that can be used to ensure that your ex's needs are met.

To be frank your focus should be on issuing the Divorce Petition as a matter of urgency and trigger the financial negotiations at the same time

One last question - how much does a one bedroom property in the same general area as your current home cost to buy?

Customer: replied 1 year ago.
It is about 150 K - Ok i thought that the principle of equal division would mean that a roughly equal split including any inheritance, and this is my mothers understanding which is why she is anxious to protect her future bequest
Expert:  Clare replied 1 year ago.

No that is not the case - especially if the Inheritance is received after the Divorce has been issued.

The court will only take account of Inherited assets where there are insufficient funds in the other assets to meet the needs of both parties.

In your case if the assets were sold then whilst your wife would receive a larger share of the joint assets your actual inheritance would be safe.

Indeed even if you had already received the Inheritance this would be the case (assuming you had always kept it separate from any other assets).

Your mother can certainly look at setting up a Trust within her Will.

However any trust from which you will benefit will run into the same problem - and whilst it could benefit your sons the Trust could be challenged once they were both over 18 if they wished to force an immediate distribution.

If you trust your brother implicitly then your mother could gift her monies to him on the basis that he will settle with you when the divorce is over; but my suggestion is that you move on the divorce immediately and start the financial negotiations.

If not then yes a Family Will Trust will be the next step.

Please ask if you need further details