Why a Will Trust is Essential for Blended Families
Estate planning is a complex process, and it becomes even more intricate for blended families. When children from previous relationships are involved, ensuring your estate is distributed fairly and according to your wishes is essential. A Will Trust can serve as an effective solution, offering security, clarity, and fairness for both your spouse and your children, providing peace of mind for everyone involved.
If you’re a parent in a blended family wondering how to safeguard your family’s future, this article will explain how a will trust works, why it’s beneficial, and how you can set one up.
What is a Trust?
A trust is a legal arrangement in which one person, known as the trustee, manages money or assets for the benefit of another person called the beneficiary. Trusts can have more than one trustee and beneficiary.
What is a Will Trust?
A will trust is an arrangement set up in your Will, and it only comes into effect after you pass away. This differs from other types of trusts, which can be created during your lifetime. Will trusts are particularly useful in situations involving complex family dynamics as they ensure that specific instructions are followed for the distribution of assets.
What is the Most Common Type of Trust?
For blended families, the most common type of will trust is the life interest trust.
This type of will trust allows a beneficiary, often a spouse, to use an asset or receive an income from it during their lifetime. Once their beneficial interest ends—typically upon their death or remarriage—the remaining assets in the trust pass to other beneficiaries, such as children.
With a life interest trust, trustees are appointed to manage the assets, ensuring that your instructions are followed and the asset is well-maintained for future beneficiaries.
Consider This Scenario
To better understand how a will trust works, here’s a case study involving a blended family:
Case Study
John and Anna are married. Anna has a child, Adam, from a previous relationship, and John and Anna have a child together, Daniel.
If Anna were to pass away first and leave all her assets to John, he would have total control over the distribution of her estate after her death. Even if they wrote mirrored Wills while Anna was alive, John could later change his Will, potentially excluding Anna’s child, Adam, and leaving everything to Daniel, or even a new partner.
Additionally, if John remarried, his new marriage would revoke his existing Will, which could unintentionally prevent Adam from inheriting anything.
By contrast, if Anna included a life interest trust in her Will, she could direct that her most valuable asset—for example, her half-share of the family home—be placed in trust. Under this arrangement, John could continue to benefit from the house (for instance, by living in it or receiving any rental income) during his lifetime. However, the trust would ensure that, when John’s beneficial interest ended, Anna’s share of the property would automatically pass to both Adam and Daniel equally. This would safeguard Anna’s intentions, regardless of any changes John might make to his own Will in the future.
Additionally, a life interest trust can include provisions to end if the beneficiary remarries. For example, if John remarried, the trust could terminate at that point, and Anna’s estate could pass directly to her children, Adam and Daniel.
This type of planning ensures fairness and protects the interests of all family members, making it an ideal solution for blended families.
Are Trusts Expensive?
A common misconception is that creating a trust is costly and only suitable for wealthy individuals. However, will trusts are accessible to a wide range of people and are becoming an increasingly popular tool in estate planning.
The cost of setting up a will trust will largely depend on the complexity of your estate and the specifics of your requirements. While there may be upfront costs associated with professional advice and drafting the documents, these expenses are often outweighed by the long-term benefits of ensuring your wishes are carried out and your family is protected.
Trusts can also help save money by preventing disputes over your estate and reducing potential inheritance tax liabilities. Working with a knowledgeable solicitor or estate planner can help you understand the costs and benefits specific to your situation.
A Will Trust is a Gift for Your Family
Planning for the future, especially in the context of a blended family, can feel overwhelming. But a will trust offers more than just legal protection—it provides peace of mind, knowing that your loved ones will be taken care of according to your wishes.
Whether you’re concerned about your spouse’s financial stability, your children’s inheritance, or maintaining harmony among family members, a will trust is a powerful tool to address these complexities.
If you’re ready to take the first step, we’re here to help. Our team of estate planning experts specialises in creating tailored solutions for blended families, here in Hong Kong, Thailand and in the United Kingdom. Contact us today to learn how we can help you secure your family’s future.
