Married with children from a previous relationship – how can I divide my assets fairly between them when I die?

1 Jan 2022 | Jan Atkinson
older man on a bench

Table of Contents

There are several ways of doing this. If sufficient assets are available apart from the family home, dividing those between the surviving spouse and children from a previous marriage may be possible. But if, as is often the case, most of the assets are tied up in the family home and/or the spouse needs most of the other assets to live on, a life interest in some or all of the assets can be given to the spouse with the children ultimately receiving the capital on the death of the spouse.

A life interest would give the surviving spouse a right to income, such as interest on investments and a right to occupy the property.  That would mean the children have to wait for the surviving spouse’s death to receive their inheritance. Still, at least the underlying capital is ultimately protected for them and cannot be diverted elsewhere post-death. Alternatively, the will could include a discretionary trust which creates flexibility and enables the trustees, who should be carefully chosen, to take account of the needs and circumstances of the named beneficiaries at the date of death in deciding what each beneficiary should receive.

Division of assets – the impact on your tax

Each option has tax consequences, so these should be carefully considered before proceeding. An English-domiciled surviving spouse is a fully exempt beneficiary, so no Inheritance Tax (IHT) is payable on assets passing to a spouse, whereas if non-exempt beneficiaries such as the children receive more than the tax-free allowances of £325K plus the £175K residence nil rate band, IHT at 40% would be payable on the excess.

The ‘tax tail should not necessarily wag the dog’, but the tax effects will be important in deciding how to divide an estate between exempt and non-exempt beneficiaries.  This is an area of potential conflict, so appointing neutral executors and trustees to administer the estate and ongoing trust would make sense. Neutral lay executors may not be easy to find, so a professional executor as a solicitor may be a useful option.

Share this article


Contact us today

For a free initial conversation call 020 7485 8811

Email us Send us an email and we’ll get back to you

    Related InsightsVIEW ALL

    1. Forged will pic

      Forged Wills

      If the contents of a will comes as a surprise, then one of the things to consider is whether the...

      Read more
    2. man looking at a lake

      Can Someone With Dementia Make A Will or...

      It’s a sad reality in an ageing population that more people than ever suffer from dementia in the UK....

      Read more
    3. Businessman and Male lawyer or judge consult having team meeting with client, Law and Legal services concept

      Beware of appointing your children as executors

      Where tensions exist between family members, making your children the executors of your will can cause huge problems with probate,...

      Read more
    4. older man on a bench

      Married with children from a previous relationship – how...

      There are several ways of doing this. If sufficient assets are available apart from the family home, dividing those between...

      Read more
    5. lady singing document

      Making a Will by video link

      The Government has recently announced plans to allow for the witnessing of Wills and Codicils by video conferencing. This is...

      Read more
    6. guide dog

      Leaving money to charity in your will

      Why leave money to charity in your Will? Leaving money to charity in your will is a significant source of...

      Read more
    7. garden

      Property up to £1m can be inheritance tax...

      Changes to inheritance tax allowances mean married couples can leave property worth £1 million tax-free from 6 April. Modest houses in parts...

      Read more
    8. hampstead office

      Hampstead solicitor becomes notary public

      Hampstead solicitor Elspeth Neilson of Osbornes Law has qualified as a notary public (a notary), meaning she can now certify...

      Read more
    9. property in spain

      Property abroad? Beware of forced heirship rules

      Whether it’s a holiday home, an investment property or a place you want to retire to, if you own...

      Read more
    10. unwanted call

      How to Protect Yourself From Will Scams

      Much has been written about protecting older or vulnerable people from online scams – according to Age UK, an older person...

      Read more
    11. house in regents park london

      Residence Nil Rate Band

      What is the Residence Nil Rate Band? The Residence Nil Rate Band is an additional nil rate band. It can...

      Read more
    12. smartphone

      What happens to your digital assets on death?

      This question has become increasingly prominent with the advancement of technology and the increase in social media platforms. Digital assets...

      Read more
    13. international flags on wall

      Assets abroad? Why you may need more than...

      As more of us become internationally mobile, it’s increasingly common to own assets abroad. Yet lawyers say many people...

      Read more
    14. a couple doing DIY

      The Problem with DIY Wills

      The Law Gazette has recently reported that ‘DIY Wills’ are being blamed for the rise in probate disputes, and this...

      Read more
    15. 25.3.2019

      Cross Border Issues – Wills and Succession

      An increasing number of individuals have connections with more than one jurisdiction. Conflicting rules can significantly affect their estate planning...

      Read more
    16. person receiving bad news

      Intestacy Rules

      What Happens When Someone Dies Without a Will? It is estimated that between half and two-thirds of the adult population...

      Read more
    17. two ladies talking

      Mutual Wills

      The High Court’s decision in the recent case of Legg and Burton v Burton [2017] has highlighted the issues surrounding...

      Read more