Questions - what happens if something happens one of us with no will made? Isn't some money/assets frozen for the children when they are of age, potentially leaving the remaining spouse tight financially? If we make a will, does this sort this out financially?
If A and B are married with children X, Y and Z, and A dies without having made a will, B inherits two-thirds of A's estate and the remaining one-third goes to X, Y and Z in equal shares — so, one-ninth each.
If X, Y and Z are minors they can't give a receipt for the property they are entitled to. Plus, they couldn't manage/administer the property if it were transferred to them. So what effectively happens is that the administration of A's estate is prolonged until the youngest child turns 18, which may be many years. The administrator has to look after the children's property until it can be handed it over to them, but they have limited powers and must do so very conservatively — meaning, for example, that if there's a lot of cash they can't invest in shares or property; they just keep it on deposit earning (these days) very little interest and being eroded by inflation. Once each kid turns 18 they are entitled to their share, even if they are young and stupid and have a peanut for a brain and will foreseeably waste it.
A can make a will which can avoid these problems. There are two common ways to do this:
- A makes a will leaving their entire estate to B, if B survives A. A may be confident about doing this because they know that B cares about the children, will look after them, will deal with the property wisely and will make (or has already made) a will leaving B's estate (including anything inherited from A) to the children (who hopefully will be adults by the time B dies).
- A can make a will leaving a share of the estate to the children, but establishing a trust to administer the kid's shares until they are old enough to take responsibility for themselves. B is appointed as the trustee, and is given the authority to make investment decisions and other choices that an administrator couldn't or wouldn't make. B is also given the authority to retain professional advisers to advise them about the decisions they have to make, if they feel they need professional support. Basically, the will sets up a structure that can manage the minor children's money more prudently and effectively than an estate in administration can do.
In making their Will, A also needs to consider the possibility that when they die B will already have died, or that B will die at the same time as A (e.g. in a car crash). In this case A will want to leave the entire estate to the kids and, again, he will want to provide for a trust to administer it until the kids are old enough to take over. In this scenario B won't be around to act as trustee, so the will must say who is to be trustee. Usually it's family members — the family members who, you hope, would step up to care for and look after the kids anyway in a scenario like this. Obviously, A will need to ask for their agreement before he makes a will naming them as trustees. (The will will also name them as guardians of the children.)