Send us a message
Fill in our form and we'll get back to you as soon as possible
Search site
Contact our offices
Make an enquiry
Estate planning is a crucial aspect of individual and family finances.
Among the various tools available for estate planning, Life Interest Trust Wills have gained significant public attention, especially from the MoneySavingExpert Martin Lewis; who is a common source for a sudden influx of incoming Will appointments. These types of Wills provide a flexible and secure way of maintaining control of how your assets are distributed.
A Life Interest Trust Will, also known as an Interest in Possession Trust, is a mechanism to preserve/ring fence an asset for your loved ones and is set up by creating a Will. It is most commonly used for married couples who own a property together, wishing to ensure as much of their property as possible passes on to their children.
The most common form of joint ownership for property is as ‘beneficial joint tenants’; this means you both own the whole property together. If one owner dies, the survivor owns the whole, automatically (irrespective of what your Will or the intestacy rules provide). This is not ideal where care home fees may be expected or your estate may be split between a blended family, or where the survivor may remarry, change their Will or otherwise redirect their estate.
For a Life Interest Trust, the property must be held as Tenants in Common, where each party owns a distinct individual share of the property (usually 50:50). These 50:50 shares allow the deceased’s share to be ringfenced by a trust in their Will.
When the first spouse dies, the survivor (“The Life Tenant”) will not receive the deceased’s share as capital, but rather they will benefit from it by virtue of the Will trust. This does not stop the Life Tenant living in the property, and they could move and the trust can move with them. Similarly, the property could be sold, and the deceased’s share of the sale proceeds would be retained in the trust and invested. The terms of the trust allow the Life Tenant to live in trust property, and to receive any income (rental, interest, dividend) arising from the trust fund.
When the Life Tenant dies (or in some cases, remarries, or voluntarily gives up the trust) the beneficiaries named by the first deceased (usually their children) will receive their inheritance.
The Trust can be advantageous for several reasons.
Despite the overall benefit of having a Life Interest Trust in place, there are several matters to consider before forming a trust:
At Glanvilles, you can consult one of our Solicitors in the Private Client team for tailored advice to suit your individual needs.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice, and should not be relied upon as advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. All content was correct at the time of publishing. Legal advice should always be sought in relation to specific circumstances.