Leading County Durham law firm Latimer Hinks has issued a warning to all wealthy parents - whether they do or they dontwant to leave their fortune to their children.
Experts at the practice, who regularly deal with ultra high net worth (UHNW) clients, are once again urging well-heeled parents to make sure they have an up-to-date and relevant will in place, following revelations from high-profile celebrities and entrepreneurs that they plan to disinherit their children.
The warning comes after Lenny Henry announced he is unlikely to leave his reported £5m fortune to his daughter Billie. The comedian said it was right for rich parents to cut their children out of an inheritance, so they learn to "stick up for themselves.
He is the latest in a string of super-wealthy celebrities and uber-successful businesspeople who have said they will not be leaving their riches to their children.
Chef Nigella Lawson has insisted she will not be handing over her fortune because she does not want to "ruin her kids, while both former Dragons Den star Duncan Bannatyne and music mogul Simon Cowell have said they plan to leave their money to charity. Composer Andrew Lloyd Webber has also said his five children will get just a fraction of his £750m wealth and Sting revealed he will not be leaving his children a trust fund, but spending his cash while he is alive.
Anne Elliott, chief executive at Latimer Hinks, said: "It isnt very often that we get asked for help to draw up a will which will disinherit a child. Usually, clients come to us for advice about how they can best conserve as much of their wealth as possible to hand over to the next generation, rather than to the tax manor indeed charity.
"But, there is an increasing debate about the destructive effect of leaving your children too much money. UHNW parents are concerned that their children will not develop a good work ethic and will never learn to stand on their own two feet if they are reliant on a large trust fund.
Latimer Hinks is urging parents to recognise the importance of making and regularly updating a will to make sure their money goes where they want it to.
While as a matter of principle you are free to leave your estate to whomever you wish, disinheriting a close family member (particularly a dependent) is by no means simple. Under the intestacy legislation children may have an automatic entitlement. Additionally, there are many people who could make a claim against your estate, including your spouse, former spouse, your children or anyone who has been financially dependent on you immediately before your death.
It is entirely possible that a disinherited child will make a claim against your estate and from our experience these claims can take years to resolve. The relationships between claimants and those to whom money has been left could break down completely, so you need to bear in mind not just the financial impact of disinheriting, but the potential for emotional fallout.
A useful alternative to disinheriting is to create a Trust Fund with perhaps independent/family Trustees managing the fund, so your children and their children and indeed future generations will not necessarily inherit absolutely but can perhaps have the use of funds or certain assets and you can stipulate the basis upon which they might benefit/have the use of any monies or assets you leave.
The ages of 21 or 25 are often chosen for children to benefit although some parents opt for 30 or even older with the aim of ensuring that a child has independently mapped out a career path by then. Often the decision as to the age is left to the Trustees. The obvious thinking is that children are more likely to display greater levels of financial maturity as they get older. Prince William and Prince Harry both received £10m when they reached 30; money left to them from Princess Dianas estate.
Anne Elliott said: "While celebrities and highly-successful entrepreneurs will be dealing with larger sums of money than most of us,comments such as those made by Lenny Henry usefully highlight for everyone the importance of having a current and relevant will in place; think carefully about who should inherit your estate, and at what age.
For further information contact the Private Client Team at Latimer Hinks Solicitors: 01325 341500