Life Interest Trust Will Solicitors
In Bognor Regis, West Sussex
Life Interest Trust wills have a number of advantages. By putting one in place, you can specify who assumes responsibility of your estate so your home and property is in safe hands and taken care of as you intended, after your death.
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Life Interest Trust Wills
Protect your family’s future while providing for the people you love
A will should do more than simply say who inherits your assets when you die. It should reflect your family, your relationships and what you want to happen to your home and other assets in the future.
For some people, leaving everything outright to a spouse or partner is exactly right. For others, particularly those with children from a previous relationship or a blended family, it may not provide the protection or control they want.
Life interest trust wills can offer another option.
A life interest trust can allow your spouse or partner to continue living in your family home, or benefit from other assets, during their life while ensuring that the underlying capital ultimately passes to the beneficiaries you have chosen.
At MJR Solicitors, we can explain how life interest trust wills work, whether one could be appropriate for your circumstances, and how it could fit into your wider estate planning.
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What is a Life Interest Trust?
A life interest trust is a legal agreement created through your will. It gives someone, known as the life tenant, the right to benefit from particular assets during their lifetime without necessarily giving them outright ownership.
For example, you might own a home with your spouse and want your spouse to be able to continue living there if you die first. At the same time, you may want your share of the property ultimately to pass to your own children.
A life interest trust could allow your spouse to continue living at the property for their lifetime, while your share is held in trust for the children to inherit later.
The life tenant can have a right to occupy the property or, depending on the trust terms, receive income generated by the trust during their lifetime. They don't simply own the trust property outright.
When the life interest comes to an end – commonly when the life tenant dies – the trust assets can then pass to the other beneficiaries named in your will.
This is why a life interest trust will can be particularly useful when you want to provide for someone during their life, protect the ultimate inheritance, and minimise disputes for other family members during probate.
How does a Life Interest Trust work?
The exact arrangement will depend on your circumstances and the terms of your will, but a straightforward example might look like this.
You and your spouse own your family home – your main residence. You have children from a previous relationship and want to make sure they ultimately receive your share of the property. Your will could provide your spouse with a life interest in your share of the home.
If you die first, your spouse becomes the life tenant. Unless you've specified a definite length of time for the Trust to remain in place, they can continue living in the property until they either die, remarry, or choose to cohabit – whatever the trust's terms may be. Your share isn't simply transferred to them outright.
The trustees must manage the trust in accordance with the will. Your spouse can benefit from the property during their lifetime, while your chosen beneficiaries – perhaps your children – have an interest in what happens to the trust assets in the future.
When the life tenant dies, the life interest normally ends and the ownership of the actual property transfers to your estate to be dealt with as expressed in your will.
The arrangement can be drafted to reflect particular circumstances, including what happens if the property is sold, the life tenant needs to move home, or the trust assets generate income.
Why consider a Life Interest Trust will?
There are several reasons why people consider life interest trust wills as part of their estate planning.
Protecting your children’s inheritance
If you leave your entire estate to your spouse or partner outright, they generally have complete control over what happens to those assets afterwards.
That may be exactly what you want. But if you have children from a previous relationship, you may also be concerned about what happens to their inheritance if your surviving spouse remarries, changes their will, or their own circumstances change.
A life interest trust can provide a different balance: your spouse or partner can benefit from the relevant assets during their lifetime, while your chosen beneficiaries have a defined interest in what happens to the capital afterwards.
This can be particularly relevant to blended families, second marriages and relationships where each partner has children of their own.
Providing a home for your surviving spouse or partner
A life interest trust doesn't necessarily mean choosing between your partner and your children.
The trust can be structured to give your surviving spouse or civil partner security while protecting the underlying asset for the people you ultimately want to benefit.
For example, your spouse may have the right to live in the family home for life. The capital interest in your share of the property can then pass to your intended beneficiaries when the life interest ends.
Greater control over your estate
One of the key benefits of a life interest trust is that it can give you greater control over how particular assets are dealt with after your death.
Rather than leaving assets outright, you can set out how they are to be held and who should benefit from them during and after the life tenant’s lifetime.
You can tailor the terms to your circumstances rather than rely on a one-size-fits-all arrangement.
Considering future care costs
Care fees are another reason why people ask about life interest trust wills.
A properly structured trust may mean that the deceased's share of a property is treated differently from assets owned outright by the surviving spouse when the surviving spouse’s finances are assessed for care purposes.
However, a life interest trust doesn't guarantee you can avoid care home fees. Local authorities can consider whether someone has deliberately deprived themselves of assets to reduce what they pay towards care. The circumstances and timing of any planning therefore matter.
This is an area where taking proper legal advice is important. The purpose of your will should be to reflect your genuine wishes and circumstances, rather than simply trying to remove assets from a future assessment.
Life Interest Trusts and property ownership
If you're considering a life interest trust over a share of your family home, how you own the property matters.
Many couples own their home as joint tenants. In that situation, when one owner dies, their share in that property will pass automatically to the co-owner, regardless of whether or not this is stipulated in your will.
If you want your share of the property to pass into a life interest trust under your will, it may be necessary to dissolve the joint tenancy and hold the property as tenants in common.
As tenants in common, each owner has a separate share in the property. You can then deal with that share through your will.
This is an important part of the process and should be considered alongside your will. We can advise you on the options and, where appropriate, the steps required to change how you hold your property.
What about Inheritance Tax?
Inheritance Tax (IHT) is another important consideration when setting up a life interest trust to benefit future generations. Considerations can be complex and may vary based on jurisdiction.
A trust's tax liability depends on the type of trust, the assets involved, and the conditions under which it was created. A qualifying life interest for a surviving spouse or civil partner can receive the spouse or civil partner exemption on the first death. Still, the trust assets can subsequently be relevant when considering the life tenant’s estate for Inheritance Tax purposes.
Income tax considerations also arise where a trust produces income. For example, HMRC recognises an interest in possession trust as one where the beneficiary has an immediate right to trust income as it arises.
In other words, a life interest trust should not be viewed simply as a way of avoiding inheritance tax. Instead, it should form part of a wider estate planning strategy that takes account of your assets, beneficiaries, and family circumstances, to mitigate IHT and potential future IHT liability.
We can explain the relevant rules and, where appropriate, recommend that you obtain specialist tax advice.
Is a Life Interest Trust right for you?
A life interest trust can be particularly worth considering if:
- You are married or in a civil partnership and want to protect your children’s future inheritance.
- You have children from a previous relationship.
- You are entering a second marriage or have a blended family.
- You want your surviving spouse or partner to remain in your family home.
- You want particular assets to pass to specific beneficiaries after the life tenant's death.
- You are concerned about what could happen to your share of the property if your partner later remarries or their circumstances change.
- You want to consider care costs as part of your wider estate planning.
- You want greater control over how you distribute your assets among different family members.
That does not mean a life interest trust is automatically the right solution.
For some families, an outright gift may be simpler and more appropriate. In other circumstances, a flexible life interest trust, discretionary trust or another form of estate planning may provide a better fit.
The right approach depends on your particular circumstances, relationships, assets and wishes.
Why Choose MJR Solicitors?
Choosing the right solicitor for your will is about more than having the legal documents prepared. You need to understand what you are putting in place, why it is appropriate for your circumstances and how it could affect the people you care about in the future.
At MJR Solicitors, we take a straightforward, no-jargon approach to wills and estate planning. We understand that every family is different, whether you have children from a previous relationship, are part of a blended family, have entered a second marriage or simply want greater control over what happens to your assets.
We will take the time to understand your circumstances and explain how a life interest trust works, who can benefit from it and what other considerations may apply, including property ownership, care fees and Inheritance Tax.
Our aim is simple: to give you clear, practical legal advice you can understand, so you can make a more informed decision about your family’s future.
If you're considering a life interest trust will, speak to MJR Solicitors in Bognor Regis to discuss your circumstances and your options.
Protect what matters to you
A life interest trust can be a useful way of balancing the needs of a surviving spouse or partner with your wishes for the future inheritance of your children and other beneficiaries. But every family is different, and the details matter.
By putting one in place, you can specify who assumes responsibility for your estate, so your home and property are in safe hands and cared for as you intended after your death.
Speak to MJR Solicitors in Bognor Regis to discuss your circumstances and find out whether a life interest trust could be appropriate for you. Our will specialists can advise you and help you consider all options for this type of will, including adding a Life Interest Trust to either a new or existing will.
Life Interest Wills from £285 plus VAT per will. Please contact us for our latest fees and special offers.
For more information on our will service or to arrange an appointment, contact us online or by phone today for an initial consultation:
mark@mjrsolicitors.co.uk
info@mjrsolicitors.co.uk
01243 945054
Frequently Asked Questions
A standard Will can leave assets directly to your chosen beneficiaries. A life interest trust Will can give someone the right to benefit from specific assets during their lifetime, while protecting the underlying capital for other beneficiaries. The exact terms depend on your circumstances and how the will is drafted.
It can provide greater control over what happens to certain assets after your death. This can be particularly useful if you have children from a previous relationship or a blended family, allowing your spouse or partner to benefit while protecting your chosen beneficiaries' eventual inheritance.
It may affect how your share of a property is treated when care costs are assessed, but it does not guarantee protection from care fees. The circumstances surrounding the trust and your wider estate planning can be important.
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