the dangers of basic mirror wills
Andrew Pearson holds the STEP Advanced Certificate in Will preparation for England and Wales
The idea of mirror wills is simple. A couple leaves everything to each other. Then, they believe, their estate will benefit both of them for life, and their children after that. The bad news is such a simple idea can backfire badly, utterly destroying the best of intentions.
I was browsing through my LinkedIn page the other day and found a very personal piece from an accountant. It explained how he had been unintentionally disinherited by his father when he was a young child.
His dad had left everything to his wife (stepmother to the accountant), trusting her to do the right thing by his son. She then promptly left everything to her own family on her death and the door closed on the boy.
This is just one example of how mirror wills, written with the best of intentions, can unintentionally be the most dangerous of documents.
In the accountant’s case, the danger was clear as his father had already remarried. But dangers surround basic mirror wills even between natural parents of children.
To illustrate the dangers, let me imagine my own possible future situation and hypothetically kill off my beloved wife Kath. It’s nothing personal, my love ─ this is more a commentary on men’s need for relationships and their innate inability to look after themselves.
So, here we go with some possible nightmare scenarios…
My wife Kath dies and after a while I meet someone and remarry
Simply by marrying I invalidate my previous will. If I die without writing a new will, the law of intestacy would pass all ─ or at least a large proportion of my estate including Kath’s share ─ to my new wife. I have thereby unintentionally disinherited my kids. I’m pretty sure that is not what Kath would have wanted to happen, either to her share of our assets or to our kids.
Kath dies and I remarry, but then my new wife divorces me
She’s probably fed up with me complaining ‘that’s not how Kath would have done it…’ Anyway, the point is I lose half my estate in the settlement, unintentionally disinheriting my kids. Again, not what Kath would have wanted.
Kath dies and I remarry, but my kids and my new wife don’t get on
Knowing where my bread is buttered, I side with my new wife. Relationships get so bad, I intentionally disinherit my kids. Certainly not what Kath would have wanted.
Kath dies and I launch into a mid-life crisis spending spree
Next thing I know, I’m bankrupt. I’ve blown the estate and I’ve unintentionally disinherited my kids. Kath would want to ensure I’m provided for if she died before me ─ but she would also have wanted protection of our assets for our kids.
Kath and I live to old age and then I go into care
See, in my imaginary world, bad things happen to me as well!... Eventually Kath dies. As the house is now solely in my name, it has to be sold to pay for my care fees. Our estate is steadily depleted and our kids disinherited. All thanks to the dreaded mirror wills.
We both die and our kids get clobbered with Inheritance Tax
The nil rate band, upon which loved ones pay 0% tax, has not risen since 2009, and won’t until 2020/21. No wonder the taxman’s take has risen to over £5 billion in the past seven years. Mirror wills are an invitation for a tax grab ─ so we really need to think beyond them at all costs.
I’m sure we can all identify with one or several of the financial predator scenarios above
And these financial predators impact on our children just at the point they inherit directly from a basic mirror will. So the ever-decreasing story of family inheritance continues, fuelled by mirror wills.
With 42% of marriages ending in divorce, there are now more divorced or separated couples than married ones. There’s also a rise in co-habitation where there may be children from two or more relationships.
So we see that basic mirror wills are financial disasters waiting to happen, with predators often the main beneficiaries.
If these scenarios resonate and concern you, there are estate planning options that provide the protection you want, so don’t leave things to chance ─ choose to have a free initial consultation with me and get informed.