Your Children's Inheritance
What happens to the money you want to give your children if you remarry?
It may not be the first thing that comes to mind after a divorce or separation, but the question of what might happen to your children's inheritance really should be addressed. After all, what happens if you or your ex remarries? Who then would inherit - would it be the new spouse? Or what about step children? Protecting your children's inheritance is important, and needs to be discussed.
The best and easiest way to deal with the potential problem is to write a will which details whom you want your estate, your money, and your possessions, to go to after you have died. Remember to keep this updated, especially if you remarry, if any of the original beneficiaries pass away before you (or you fall out with them for example), or if a separation becomes a divorce. Without a will, under the intestacy rules, your ex will be able to inherit some or all of your estate, which could leave your children with a problem (and your new partner in even more trouble).
Another way to plan for your children's future is to make gifts to them during your lifetime. This can be in the form of savings, but beware that these can be taxable just like any savings option can be - it doesn't matter how old the saver is. If the tax is going to be a large issue on a large gift, then it could be worth looking at individual savings accounts (ISAs), as Junior ISAs and some other kinds of investment products are tax free.
Trusts are another option. These are great for young children, as it means that the money or property is kept safe until they are 18, 21, or whichever age you choose for the trust - and your children - to mature.
Beware of cohabiting. This is no high moral stance, but more of a financial problem that could just be about to rear its ugly head. If you are paying the mortgage on a property, and a new partner moves in with you, it could be that, in the eyes of the law, they end up with an interest in the property after your death - an interest that you were not aware of, and that you would rather went to your children. Equally, if you move into a house on which someone else is paying the mortgage, you could end up with nothing if they die first. This is why speaking to experts, and making straightforward, valid wills is so important.
If wills aren't something you are comfortable discussing, and then why not draw up a prenuptial agreement? Although not legally binding in the UK (although there are moves to make them so), judges will take them into account when awarding assets in a divorce. It means that your money will be kept safe so that your children can have it rather than your ex.