Estate Planning for Internationally Mobile Blended Families

A blended family — two partners, each of whom may have children from previous relationships, potentially children together, and potentially step-children from the new partner's prior relationships — presents one of the most complex estate planning scenarios in practice. When that family also holds assets in multiple countries, the complexity multiplies.

The fundamental challenge is a conflict of legitimate interests: the surviving spouse needs financial security in retirement; the children from a first marriage may fear being disinherited in favour of the new partner or their children; step-children may feel uncertain about their position. In the absence of careful planning, these tensions can escalate into costly, painful estate disputes.

This guide explains the legal framework, the structures available for managing competing interests, and the practical steps that internationally mobile blended families should take.

The UK Legal Framework: Freedom and Its Limitations

The United Kingdom (specifically England and Wales) is unusual internationally in the breadth of testamentary freedom it provides. An English person can leave their estate to whomever they choose. There is no forced heirship for adult children — unlike France, Italy, Spain, and most of continental Europe, where a proportion of the estate is legally reserved for children regardless of the will.

However, this freedom has one significant limitation: the Inheritance (Provision for Family and Dependants) Act 1975 allows a court to award reasonable financial provision from an estate to certain categories of claimant, including:

• A surviving spouse or civil partner
• A former spouse who has not remarried
• A child of the deceased
• A step-child who was treated as a child of the family
• Any other person who was financially maintained by the deceased

An adult child who was not provided for in the will (or was provided for less than they expected) can make an Inheritance Act claim — though the bar for such claims is higher for adult children than for surviving spouses. The threat of an Inheritance Act claim is often used as leverage in family disputes, even where the merits of the claim are weak.

A well-structured estate plan that reflects genuine consideration of all potential claimants — with accompanying documentation of the reasoning — significantly reduces the vulnerability to Inheritance Act claims.

The International Dimension: Forced Heirship Abroad

While England and Wales provide broad testamentary freedom, this does not help a British person who holds property or financial assets in France, Italy, Spain, or another forced heirship jurisdiction.

For assets situated in those countries, the law of the country where the asset is situated (lex situs) typically governs succession in the absence of a contrary election. In France, forced heirship (réserve héréditaire) guarantees children a minimum proportion of the estate (one-half for one child; two-thirds for two; three-quarters for three or more). In Italy and Spain, similar rules apply.

The EU Succession Regulation (Brussels IV): allows a person to elect in their will for the law of their nationality (rather than the country of the asset) to govern their estate in EU member states. For a British citizen, this means electing for English law to apply to their French villa, their Spanish apartment, or their Italian inheritance.

The election must be made explicitly in the will — a clear statement that the testator elects for the law of their nationality to govern succession of all EU-situated assets. This election does not remove the need for a probate or succession process in each country (assets must still be legally transferred), but it means English law's testamentary freedom applies rather than the local forced heirship rules.

For assets in non-EU countries (Cyprus pre-application specific regime, UAE, Thailand, Indonesia), different rules apply and local legal advice is essential.

The Competing Interests in a Blended Family

Imagine a second marriage between two individuals, each with children from prior relationships, and perhaps children together. The estate planning must address:

• The surviving spouse: needs financial security for the rest of their life. May not have independent assets. Should not be forced to leave the matrimonial home on the death of the first to die.
• Children from the first marriage: entitled to inherit from their biological parent. May be concerned that assets will pass entirely to the new spouse and then, on the spouse's death, to the spouse's own children — effectively cutting them out.
• Step-children of the new marriage: may have lived with the step-parent for decades and feel a legitimate connection to the estate.
• Children of the new marriage: straightforwardly the children of both parties and typically provided for clearly.

There is no arrangement that perfectly satisfies all parties — resources are finite. The role of estate planning is to create a structure that meets the most important needs of each party while being transparent enough to minimise the risk of post-death disputes.

The Discretionary Trust as a Solution

A discretionary trust is the most flexible estate planning tool for blended families. Under a discretionary trust:

• The assets are held by trustees (professional trustees, or trusted individuals appointed by the deceased)
• The beneficiaries are all the family members (spouse, all children, step-children)
• The trustees have discretion to distribute income and capital to beneficiaries as they see fit, guided by the letter of wishes

The advantages for a blended family:

Flexibility: a discretionary trust can respond to changed circumstances. If the surviving spouse remarries, the trustees can reduce distributions to them and increase distributions to the children. If a child suffers financial hardship, more can be distributed to them. If a beneficiary makes large Inheritance Act claims, the trust structure provides some protection.

No single beneficiary controls the assets: the trust assets cannot be unilaterally directed by the surviving spouse into a new relationship or away from the first marriage's children. The trustees act independently.

Potential IHT benefits: assets in a discretionary trust are outside the beneficiaries' estates for IHT purposes (subject to the ten-year periodic charge and exit charge — see the offshore trust ten-year charge article).

Transparency: all beneficiaries know they are in the class of beneficiaries, which removes the fear of simply being forgotten.

The Life Interest Trust for the Family Home

For the family home specifically, a life interest trust (also called an interest in possession trust) provides a widely used structure:

• On the first death, the family home is held on trust for the surviving spouse for life — the spouse may live there, and cannot be required to leave, for as long as they wish
• On the death of the surviving spouse, the property passes absolutely to specified beneficiaries (typically the children of the first marriage, or shared with children of both marriages)

This gives the surviving spouse the security of their home for life while protecting the children's expectation of inheriting the property.

IHT considerations: a life interest left to a surviving spouse is a "qualifying interest in possession" for IHT, meaning the property counts as part of the surviving spouse's estate (benefiting from the spouse exemption on the first death) and is included in the IHT calculation on the second death.

The surviving spouse's estate on death will include the life interest property. This affects IHT planning — particularly the availability of the Residence Nil-Rate Band (RNRB), which is available where a "residential property interest" passes directly to direct descendants. Ensure the trust is structured to preserve RNRB eligibility where possible.

The Letter of Wishes

A letter of wishes is a personal document that accompanies the will or trust deed, setting out the testator's wishes for how the trustees should exercise their discretion. It is not legally binding on the trustees but carries significant moral weight and is typically followed where it is reasonable to do so.

For a blended family, the letter of wishes provides an opportunity to:

• Explain the reasoning behind the estate plan (reducing the risk of beneficiaries feeling "surprised" by the will)
• Set out wishes for distributions in specific foreseeable circumstances (surviving spouse remarries; a child faces particular need)
• Express views on how the trustees should weigh competing interests
• Set out non-financial wishes (who should receive specific items of personal property; wishes about the family home)

Unlike a will, a letter of wishes can be updated at any time without formality — simply by writing a new letter and informing the trustees. This makes it a flexible, living document that can evolve as family circumstances change.

The Importance of Family Communication

Estate disputes arising from surprise are far more common than disputes arising from genuine injustice. A child who knew from conversations with their parent that the bulk of the estate would pass to the surviving spouse, and why, is significantly less likely to make an Inheritance Act claim than a child who discovers this for the first time when the will is read.

Where relationships and circumstances allow, discussing the broad shape of the estate plan with beneficiaries in advance is the most effective dispute-prevention tool available. This does not require sharing the exact financial details — but explaining the philosophy and the structures (why there is a trust; why the home is protected for the spouse) can significantly reduce the risk of post-death conflict.

Professional family mediation is available in cases where direct communication is difficult. A neutral mediator can facilitate discussions about estate planning that might be too fraught to manage directly.

How Global Investments Can Help

Estate planning for internationally mobile blended families is one of the most specialised areas of wealth management. Global Investments works with clients and their legal advisers to model different estate structures, understand the tax implications in each relevant jurisdiction, and design an approach that genuinely balances the competing interests of all family members.

We can also coordinate with specialists in international succession law — particularly for clients with assets in EU forced heirship jurisdictions — to ensure the estate plan is effective across all the countries where assets are held.

Wills, trusts, and estate planning are legal matters. This article provides general information only and does not constitute legal advice. Tax rules and succession laws differ between jurisdictions and are subject to change. Always seek independent legal and professional advice for your specific situation.