What happens if you disagree with the way your partner wants to spend an inheritance? That was the question the Daily Mirror posed this week in response to a letter that had been sent to the Daily Telegraph.
In the letter, the woman explained that she’s received a £20,000 inheritance from her mother. Her husband had strong opinions on what the money should be spent on—ones that she didn’t share. The letter explained the couple got married recently and the woman’s mother had died shortly afterwards.
Her husband had lost his job and was in the process of setting up a company that specialised in the installation of home gyms, and it was this that he wanted her to invest the money in. When she refused, he took offence.
Security for the future
But as her letter set out, she had viewed the inheritance as security for their future—her new husband’s argument that the new business was their future security didn’t wash, while he countered that she should view the money as ‘theirs’ and not just hers.
The Mirror asked law expert Martin Holdsworth, founder of the firm IDR Law that specialises in will, probate and trust issues his opinion. With inheritances larger than they have ever been—according to the Kings Court Trust, £5.5 trillion is set to pass to heirs between 2017 and 2047—such issues could become much more common.
Marital issues, such as a business, will become absorbed into a joint pot should you divorce later. Mr Holdsworth felt that investing in a business was very risky and while couples could draft agreements that might protect the investment, if the business failed it would be lost, and that any investment made needed to be assessed on its merits.
Compromise
He suggested that a compromise might be agreeing to match the level of any investment the partner obtained from banks, investors or a grant, as this would ensure that the prospective business was weighed and measured for its likely success by an independent body.
The woman’s mother might have had opinions on how her daughter used the inheritance, and legal experts would hope that if so, discussions had taken place before the woman died. If the conversation had taken place, then there could have been other processes such as protecting the inheritance in the form of a trust.
Inter-generational conversations about inheritance are always a good idea to avoid issues arising once someone has died, especially as a third of people rely on an inheritance to pay off mortgages, debts or fund their retirement, and while £20,000 is not that substantial, few people receive large lump sums of money in any form other than an inheritance.
He advised parents to look into ways they could protect their children from calls on the inheritance they planned to pass on.