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Disinheriting children to support grandchildren

Graham Coy, one of the firm’s most experienced solicitors and a Partner of the London office, appeared on BBC 5 Live this week to discuss grandparents disinheriting children and leaving their estates to their grandchildren.

This was the second time he was asked about this subject. Earlier in the day, he was a guest on BBC Radio Solent. The issue was raised after Housing Minister Gavin Barwell suggested that the housing crisis could be eased if people left their houses to their grandchildren and skipped a generation in their wills.

Graham explained that this may present issues down the line such as if the grandchild got divorce and the inherited assets were divided in the settlement.


PW:                             Phil Williams

GC:                              Graham Coy

PW:                             Graham Coy joins us, Partner at Stowe Family Law firm and does a lot of work around inheritance. Have you noticed a drop off in wills leaving money to direct decedents, Graham?

GC:                              I don’t think you can generalise too much really because I think the story came from a housing minister the other day who said his mother had left everything to her grandchildren, not to him. This was a way of trying to help save the housing crisis. I think it is a bit of diversion really because we have a housing crisis in this country because more and more people can’t get on the housing ladder. The housing ladder is full up and houses are very expensive. We don’t have enough houses in this country. This is not a legal issue really. I think until government starts trying to make sure that more houses are built there will be an increasing housing crisis. It is supply and demand so houses became more and more expensive for people to get on to the housing ladder.

PW:                             So in your field of work, Graham, have you had to arbitrate in disputes where a family have been bewildered when they come to the time of losing a parent that there is nothing left to them?

GC:                              Well, yes. The starting point in this country is you can leave whatever you have earnt during your lifetime to whoever you want. During your lifetime, you can give money away or when you die you can leave money to whoever you wish. There is sense in grandparents, if they can afford it, leaving money to their grandchildren as it saves inheritance tax. I think what grandparents need to be thinking about in the light of what the Housing Minister has said is firstly, can they afford to give money away. We all know that care costs and fees are terribly expensive these days and people are living longer. So they need to make sure they have enough provisions for their old age. Secondly, if they can afford it, they have got to make sure that what they give away has no strings attached. Otherwise, the tax-man will say it doesn’t work for inheritance tax and it won’t save any money.

PW:                             So what would be your best advice to a family now to ensure that once someone has died there is no dispute left behind?

GC:                              I think what you’ve got to do is make a will first of all; you can’t leave it to chance. You’ve got to either set out in your will or in the document that you leave with your will to explain exactly what you are doing and why. So, you have taken into account all of the obligations you have and you said very clearly “I think this is the best thing to do for my family”. For example, leave money to some of the grandchildren. What we’ve got to realise is that younger people these days who want to get onto the housing ladder need a lot of money, a big deposit to get onto the housing ladder. There aren’t going to be that many grandparents who can really afford to give much of their money away to the grandchildren to really help them significantly. Also, what happens if those grandchildren get divorced? Do the grandparents really want, for example, some of the money they give away to go to the ex-spouse? I am not sure it is actually that straightforward. You have to think very carefully.

PW:                             Graham, thank you very much for your thoughts. Graham Coy, Partner at Stowe Family Law.

Click here to listen to the interview (interview starts at 21:00)

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