Not a cheerful subject, however, most of us are reluctantly aware that we are not immortal. Some people shall never be aware of the timing of their demise. However, for others, they will be diagnosed with a terminal illness and must continue for the remainder of their life with the additional burden of that knowledge.
Although living with such a diagnosis must be very difficult, this does at least provide terminally ill people with an opportunity to consider protecting their assets for their surviving family members for generations after their lifetime.
Consider a married couple owning all their assets jointly. When one of them dies, the survivor usually owns all the previously joint assets in their SOLE name thereafter. Should that surviving spouse subsequently remarry or require long-term care for which they must pay, then the majority of what were once joint assets is at the risk of loss to their children as a result.
Partial Solution
Each spouse could structure their Wills and their estates so that although the first deceased’s share of assets would continue in unrestricted form to be completely and exclusively available to the survivor, such assets would also be fully protected NOT to be lost to future risks such as the remarriage or long-term care costs of that surviving spouse. A surviving spouse’s quality of care would be undiminished as the state would then cover any shortfall in costs, however the first deceased’s assets would ultimately pass smoothly to their children only AFTER the death of their surviving spouse.
Full Solution
The non-terminally ill spouse could officially transfer their share of joint assets across to their terminally ill spouse. There would be no Capital Gains Tax (CGT) or Inheritance Tax (IHT) implications* in most cases as spouses are exempt from both. Thereafter, the terminally ill spouse’s Will and estate would be structured as stipulated within the Partial Solution, ensuring that the entire initial joint estate value would thereafter be protected against the risks as previously highlighted.
*Please note that certain spouses, such as those not “domiciled” in the UK, would potentially NOT enjoy full exemption from IHT and CGT. Therefore, you should thoroughly consider ALL implications before taking any action.
The cost for this solution using the services of TRF Wills is currently (September 2022) no greater than £1,500 (INCLUSIVE OF VAT).
For further details WITHOUT fear of consultation fees or obligation, please get in touch.
TRF Wills (TRF) was created by Michael Cotterill in 2005. He is a member of the Society of Will Writers and registered with the Information Commissioner’s Office.