Barmaid Syndrome - More Technical Solutions

This is my third and final post in a series on the subject of "Barmaid Syndrome" – the fear a woman has that, after her death, her husband will re-marry, then die leaving everything to the new wife and nothing to the children. In my last post I considered some simpler solutions: (1) trusting the survivor and (2) paying the children upfront. Now, it's time to touch upon some more technically complex solutions.

Solution 3: Mutual Wills. Although what I'm about to say isn't strictly correct, the easiest way to understand Mutual Wills is to think of them as if they were a contract between two people, usually husband and wife, that once one of them has died, the survivor will leave his or her will intact. I don’t like mutual wills at all. Come to me asking for one and I will try to talk you out of it. They are inflexible, they don’t take account of the way things may change in the future, and they encourage court battles after you have gone. They are definitely the last choice solution. Having said that, Mutual Wills suit some families’ needs: and even if he grumbles your solicitor will be able to prepare them for you.

Solution 4: Life Interest. This is a type of trust that can go into your will, or you can set it up in your lifetime. Its terms are that the survivor (known as the life tenant) has the benefit of the estate while he or she lives, but after his or her death it belongs to the remaindermen, who are usually the children.

Be aware of the downside: the survivor only has an income interest – he or she can occupy real estate, or receive the interest/dividends from investments. He or she cannot touch the capital, or the proceeds of sale of real estate. Those are protected for the remaindermen. It follows that you have to be able to afford a life interest. If you impose one, then your spouse finds himself or herself short of money, there is a real risk that your estate will be challenged through the courts.

A final point is that if you go to a solicitor asking for a life interest trust, she will almost certainly suggest that you have something more complicated (such as a flexible discretionary trust, or a flexible IPDI, or both) instead. I won’t go into all the technicalities here, but you should check that you are achieving the same overall effect.