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Bloodline Wills
Ian Winterbotham explains bloodline Wills and how they can protect your assets for future generations.
Keep Your Assets in the Family
If you are determined to ensure your assets stay in your family for generations to come, you may decide to draw up a bloodline Will.
With the help of our expert team at Will Power, you can create a document that leaves your money and possessions to your children, grandchildren – and even your great-grandchildren.
What is a Bloodline Will?
When you make a bloodline Will, it usually creates a Trust after your death that keeps your assets within your family – or bloodline.
The Trust then nominates the beneficiaries, which are usually your children, grandchildren and other descendants.
These may also include nephews and nieces if you have no children. But a bloodline Will does not include the partners or spouses of your children, or their children.
You may appoint your partner and your children as trustees and executors of your Will. Your partner has a legal right to enjoy the assets while they are alive, but your children can then distribute the assets in line with your wishes.
When you create a bloodline Will, you make certain that your assets will go to your direct descendants.
Reasons for Making a Bloodline Will
You may be worried that the assets you have worked so hard for, or certain possessions that have been passed down through the generations, may leave your bloodline if you do not act to protect them.
With a bloodline Will, you can ensure your property does not pass to your surviving spouse, or one of your children’s partners.
In those circumstances, if they remarry, your assets could be passed down to the new partner’s children – and out of your family.
With conventional Wills that leave everything to your partner and children there is no clause in place that guarantees your estate will pass to your grandchildren.
However, there is still some flexibility in a bloodline Will. You may include stepchildren or adopted children as beneficiaries.
Pros and Cons of a Bloodline Will
The main advantage of a bloodline Will is the peace of mind that comes from knowing your assets will stay in your family. Trusts created by a bloodline Will can be active for 125 years.
That means your children will get their inheritance, usually as a loan from the Trust. That inheritance will stay safe if they get divorced, or go bankrupt.
The main disadvantage is the administration required to operate a Trust. It has to be registered with HMRC, and the trustees should meet once a year.
It is also worth noting that a 10-year anniversary charge – of 6% on assets above £325,000 – may be payable if the Trust is still operating after a decade.
Your beneficiaries’ needs, and those of their descendants’, must be considered regularly to ensure all decisions and payments are made in line with your wishes.
Save IHT With a Bloodline Will
If your children receive their inheritance in the form of a loan from the Trust, the value of the assets remains in the Trust. That means your children can then leave your assets to your grandchildren free of Inheritance Tax.
We go into this in more detail in other podcasts and there is a link on the website to a Discretionary Trust Wills podcast and another called Tax Efficient Wills.
Ask Will Power about a Bloodline Will
It is definitely worth speaking to one of our expert consultants if you think a bloodline Will might be the best solution for you.
At an initial, no-obligation meeting, we can discuss your circumstances in detail and outline the options available to you. Please get in touch today to arrange that first conversation.
Please note that a 10-year anniversary charge may be payable (a tax of approx. 6% on assets above £325,000) if the Trust continues 10 years or more following the death of the Testator.
