Making Provision for the Children

One of the major considerations for a lot of people when embarking on any kind of financial planning is providing for their children. Of course people’s main priority is to earn, save and manage money in order to look after their families, but in the unforeseen tragedy of a parent passing, it is essential that a Will be made, and made well, to take care of any children left behind.

Without a parental Will, all financial and welfare decisions for a child are made by the courts or according to strict statutory rules. Say, for example, a deceased father had his own company, he may have intended that his children benefit from the profits of continued business, inherit shares or even take over the business if they were old enough. Without a clear and legally binding Will, this legacy could easily be lost, especially if there are partners or senior colleagues in the business.

It is exactly the same principle for guardianship. If a mother specifically wanted her sister, aunt or friend to take care of her children in her absence, it is important she make her wishes known in a Will, otherwise the courts would award guardianship to someone they deem suitable, but whom the mother may have had issue with.

If children of 21, 19, 15 and 10 years old are left orphaned without any parental instruction, the two older siblings could apply to the courts for guardianship of the younger and would probably succeed in getting it. Similarly these two children could be in control of all the finances. Such young people taking on this sort of responsibility could be far from what the parents wanted.

Maintenance for the children in relation to guardianship also needs attention and thought. I always advise clients that the executor of a Will (someone who manages the release of funds to support the child) be different to that of a guardian. If an individual is looking after the children and has control of the money left to them, there is a distinct conflict of interest.

Without a Will, children inherit anything from an estate at the age of 18. Many feel this is too young if large sums of money or property are involved and, in a Will, parents can manage financial provision throughout the course of their child’s life (though there are tax implications in Trusts that go on past the child turning 25 years old).

I am currently dealing with a case where a man made his own will and left his estate to his son and any property, which remained, to his grandchildren. It is not clear if this means that the son can do anything with it and leave whatever remains for his family or whether the son only had a life interest and the right only to the income from it.