DO YOU WANT YOUR CHILD'S PARTNER TO GET HALF OF WHAT YOU LEAVE TO YOUR CHILD?
When the Property Relationships Act came into effect in February 2002 the world changed in terms of how we handle inheritances both those we receive from our parents and those that we will leave to our children.
By law an Inheritance is seperate property so long as it is not intermingled with relationship property. This means that any inheritance must be kept seperate and this is where the problems arise. Most inheritances are intermingled and become relationship property because at the time they are received the relationship is going along smoothly and there is no thought that it may end.
Look at this situation.
A daughter is in a stable relationship when she receives her Inheritance. Love is blind so the Inheritance is used to pay off the mortgage on the property owned jointly with her partner/spouse or invested jointly.
Immediately this happens the Inheritance loses its seperate nature and becomes relationship property. Then unfortunately the daughter's relationship fails. The total amount of her inheritance has become relationship property and will be split with her partner.
If she had an Inheritance Trust into which her inheritance had been paid, and she had used it correctly, the whole of her inheritance would have remained her seperate property.
The only safe way to protect an Inheritance is to have it placed in an Inheritance Trust where it can be accessed safely while keeping its seperate nature and ensuring it does not become relationship property.
When preparing an estate plan Inheritance Trusts will be discussed.