Happy blended families

Families these days come in all shapes and size. Over the years, we’ve advised many brides and grooms as they have brought two young families together. We’re also getting increasing enquiries from older couples; Rachel Reeves’ announcement in her budget of October 2024 that pensions will fall under Inheritance Tax (IHT) from April 2027 is prompting more happy cohabitees to tie the knot so they can benefit from the spousal exemption from IHT.

Remarriage redefines relationships legally

Whatever stage of life you’re at, blended families create new dynamics. They also redefine relationships legally. This means there are some key issues for you to consider.

While we really hope that your new relationship is your happy ever after, life doesn’t always go to plan. If this relationship doesn’t endure, you are open to claims under the Matrimonial Causes Act; in divorce, the courts start from a 50:50 division of all assets, including pensions, inherited wealth and other assets brought into the relationship (no matter if one party contributed the lion’s share).

This makes a nuptial agreement a sensible precaution. Once dismissed as unromantic, prenups and postnups now provide the structure couples need to balance the tax efficiency that marriage offers with prudent asset protection.

Ensuring your new spouse and your children are provided for financially

Secondly, it’s vital to understand that marriage supersedes any existing Wills. This means if you remarry – at whatever age – if you were to die without rewriting your Will, the laws of intestacy would apply. This would split your estate between your new spouse and your blood children in fixed shares (leaving nothing to any stepchildren). Under the Inheritance (Provision for Family and Dependents) 1975 children of the deceased are eligible to bring a claim regardless of age to seek reasonable financial provision from the deceased’s estate.

This may or may not be what you want; you may want to ensure that all your estate goes to your own children, or you may want to make sure your new spouse wouldn’t have to leave your new marital home.

Rewriting your Will should therefore be high on your to-do list to ensure your children are cared for and your money is allocated as you would wish, in the event of your death.

If ensuring your spouse’s financial security is one of your aims, you should also investigate a flexible life interest trust; this could allow your spouse to use and enjoy assets for life while safeguarding capital for your children and lineal descendants.

Planning for the care of your children in the event of your death

In blended families, planning for a child’s care if a parent dies is especially important. A legal guardian is someone formally appointed to take over parental responsibility for a child, usually if both parents with parental responsibility die before the child turns 18. Once appointed, a guardian can make key decisions about the child’s education, healthcare, living arrangements, and property, much like a parent, though without the same financial obligations. More than one guardian can be appointed, and guardians are commonly named in a Will, though they can also be appointed in a separate signed and dated document or by a court.

A guardian’s appointment usually takes effect only after the death of the last surviving parent with parental responsibility, although there are exceptions where it may take effect immediately. If no legal guardian has been appointed or there is a dispute between two potential guardians, the court can make a decision. The overriding priority is the child’s welfare. Factors to be considered include the child’s wishes, needs, background, potential risks, and the ability of proposed guardians to meet those needs. Any appointment ends automatically when the child reaches 18.

Professional advice for peace of mind

There are lots of decisions to make when planning a wedding. But alongside thinking about vows and venues, making time to get professional legal advice can give you peace of mind and security that will last long after the confetti has been cleared away.

How our family and private client teams can assist you

If you are looking for advice featured in this article please contact Caroline Burstein to discuss prenups, postnups and children or Nima Stepney who can assist with Wills and inheritance tax matters on 020 8290 0440.