Life Interest Trusts in Wills for Spouses, Civil Partners or Unmarried Partners

Life Interest Trusts in Wills for spouses, civil partners or unmarried partners. 

The technical term for a life interest arising under a Will is an “immediate post-death interest”. Life Interest Trusts give a particular beneficiary the legal right to receive the income from, or to use property comprised in the trust. This right normally lasts throughout the beneficiary’s

lifetime. Sometimes the right terminates earlier, for example on the beneficiary’s remarriage, or if the trustees exercise any overriding powers under the Will. The beneficiary is often referred to as the life tenant.

In addition to the life tenant’s right to receive the income from, or to use any property (including the home) comprised in the trust, the trustees will usually be given a power to advance some or all of the capital in the trust to the life tenant and the beneficiaries entitled after the life tenant’s death (referred to below as the ultimate beneficiaries). The trustees will not be required to exercise such a power, but will be able to do so if they consider it appropriate.

The Will specifies what will happen to the remaining assets held in the trust on the life tenant’s subsequent death (to the extent that any power of appointment has not been exercised). The life tenant does not have outright ownership of the trust assets and the trustees will retain control. The life tenant can benefit from the trust assets, while the capital is preserved for the ultimate beneficiaries. The trust assets will not pass under the life tenant’s own Will.

While income can be paid to the surviving spouse (the life tenant) throughout their lifetime, capital can be preserved for the children of the former marriage or civil partnership. A further use of such a trust is to control the level of income for purposes of means tested benefits, with protection in the context of care home fees.

If you have any enquiries regarding setting up a life interest trust in your will, please get in touch with us at 020 8240 9018 or fill in the enquiry form on our website.

Setting Up a Charity in the UK and Tax Implications


There are 6 steps to setting up a charity.

1. Find trustees for your charity

You usually need at least 3. Trustees are responsible for the operation of your charity. They must show they understand their legal requirements.

2. Make sure the charity has ‘charitable purposes for the public benefit’

Your charity must have ‘charitable purposes’ that help the public (known as being ‘for public benefit’).

Charitable purposes include: relieving poverty; education; religion; health; saving lives; citizenship or community development; the arts; amateur sport; human rights; religious or racial harmony; the protection of the environment; animal welfare; the efficiency of the armed forces, police, fire, or ambulance services

You must run your charity in a way that’s consistent with and supports its purposes – and only those purposes. Your charity can have more than one purpose, but it can’t have any purposes that aren’t charitable.

3. Choose a name for your charity

The official name of your charity is known as its ‘main name’. Your charity may also have a ‘working name’ which is another name it uses. Your charity’s main name or working name must not be the same as or too similar to the main or working name of an existing charity and must not be misleading.

4. Choose a structure for your charity.

There are 4 common charity structures and we can help you to choose an appropriate structure for your charity:

Charitable company: Your charitable companies will have to be limited by guarantees rather than shares when you register. Trustees have limited or no liability for a charitable company’s debts or liabilities.

Charitable incorporated organisation (CIO): A CIO is an incorporated structure designed for charities. You create a CIO by registering with the Charity Commission. You do not need to register with Companies House. Trustees have limited or no liability for CIO debts or liabilities.

Charitable trust: A ‘charitable trust’ is a way for a group of people (‘trustees’) to manage assets such as money, investments, land, or buildings.

Unincorporated charitable association: An ‘unincorporated charitable association’ is a simple way for a group of volunteers to run a charity for a common purpose. Unincorporated charitable associations cannot employ staff or own premises.

Your charity must have a governing document which is setting out:

  • its charitable purposes (‘objects’)
  • what it can do to carry out its purposes (‘powers’), such as borrowing money
  • who runs it (‘trustees’) and who can be a member
  • how meetings will be held and trustees appointed
  • any rules about paying trustees, investments and holding land
  • whether the trustees can change the governing document, including its charitable objects (‘amendment provisions’)
  • how to close the charity (‘dissolution provisions’)

As a trustee, you must have a copy of your charity’s governing document. Refer to it regularly because it tells you how to run your charity. For example: how many trustees are needed to make decisions, how to recruit them and how to run trustee meetings; how to look after your charity’s money, land, property, or investments and keep accounts and how to resolve internal disputes.

Register as a charity if your annual income is over £5,000 or if you set up a charitable incorporated organisation (CIO).


As a charity you can get certain tax reliefs. To benefit you must be recognised by HM Revenue and Customs (HMRC). Charities do not pay tax on most types of income as long as they use the money for charitable purposes. You can claim back tax that’s been deducted, for example on bank interest and donations (this is known as Gift Aid).

Your charity may need to pay tax if you’ve:

  • received income that does not qualify for tax relief;
  • spent any of your income on non-charitable purposes; or
  • You need to complete a tax return if your charity has tax to pay.


You can leave anything you own to charity. There are no restrictions as to what can and can’t be left to charity in your will.

You can donate:

  • a fixed amount
  • an item
  • what’s left after other gifts have been given out ‘residuary estate’
  • Your donation will either be taken off the value of your estate before Inheritance Tax is calculated or reduce your Inheritance Tax rate if 10% or more of your estate is left to charity.

Gifts to qualifying charities are themselves exempt from IHT regardless of the value of the gift. However, if a gift to charity in a Will meets certain conditions, the lower rate of 36% IHT can apply to the taxable part of an individual’s estate.

The reduced rate of 36% applies where the individual leaves at least 10% of their net estate, known as ‘the baseline amount’, to charity. In simple terms, the baseline amount is the entire estate in an individual’s sole name (not including assets held in trust, or joint assets that pass by survivorship) less debts, funeral expenses and certain IHT exemptions – such as the nil rate band, currently £325,000. 


A gift can be made to any approved charity, and you’ll need to contact the charity to ensure it can accept the proposed gift. Once the charity has confirmed it can accept the gift the property can be transferred to it. To claim the tax relief, you obtain a certificate from the charity containing a description of the land or buildings.

You must give the whole of your beneficial interest in a property, which means that you cannot live in it. An individual donor deducts the relief when they calculate their income for the tax year in which they make the gift.

For an outright gift, the amount you can deduct is the value of the net benefit to the charity at the time you give or sell them the qualifying investment, plus any incidental costs (for example brokers fees or legal fees), less any money or the value of other benefits you or a person connected with you (such as a relative or connected company) receive in consequence of you giving or selling the qualifying investment to charity.

Outright gifts and bequests to charity are completely free of Inheritance Tax. You’re not liable to Capital Gains Tax or Corporation Tax on capital gains when you make a gift of assets, such as land or stocks and shares, to charity. Charities do not need to pay Stamp Duty on acquisitions of land or buildings. 

What the recipient charity does with the gift is entirely for the charity to decide. The investments can be sold immediately, or at a later date, and the proceeds used for charitable purposes, or they can be retained by the charity as an investment.

Discretionary Trust

Alternatively, you can leave a cash legacy or share of your estate to a discretionary trust which includes charities as potential beneficiaries. The executors/trustees of your Will would then have the discretion as to how much of the gifted sum should pass to charity. 

They can also decide which charities to benefit. Whilst the executors/trustees will have discretion, you can leave a letter of wishes providing guidance as to which charity or charities you wish to benefit and by how much.

If you need further legal advice on setting up a charity, please contact us at 020 8240 9018 or fill in the enquiry form on our website.

Are you considering buying a property for your children?

Are you considering buying a property for your children?

A child under 18 cannot take legal title to property, but there are two ways in which property can be held for them: a simple ‘bare trust’ or a more formally constituted trust, such as a ‘life interest’ or ‘discretionary trust’.

(1) Under a ‘bare trust’, the property title is registered in the name of, for example: ‘A as bare trustee for B’.

In all other respects, the child is regarded as the owner of the property and will automatically be entitled to take legal title to it when they reach the age of 18.

(2) Setting up a formal life interest trust or discretionary trust before choosing a property to buy. When the trust acquires a property, the title would be registered under something like: ‘A and B as trustees for the C Family Trust’.

In this case, it is the trust itself which is effectively regarded as the owner of the property and the child’s rights to the income from the property and to take title to it will depend on the terms of the Trust Deed.

A more formally constituted trust requires a Trust Deed, which is a legal document setting out (amongst other things) who the trustees are, who the trust beneficiaries are, and how and when the trust’s income and assets should be distributed to its beneficiaries. It is possible to have any number of beneficiaries, or just one.

The two main types of formally constituted trust:

Interest in possession trust:  in this case, the entitlement is fixed, and the beneficiary must receive the income or entitlement of the trust.Discretionary trust:  this type of trust depends on the discretion of the trustee. They have control as to when or whether any income or capital of the trust is granted to the beneficiary.


Income Tax – Parental Settlements Legislation 

Whichever type of trust is used, the major difficulty which arises is the parental settlements legislation. This legislation is triggered whenever there is any gift from a parent to their own minor child.

Hence, for example, it would be triggered if the parent:

  • gifts the property
  • pays the deposit for the property
  • contributes to the mortgage payments
  • acts as source of funds for the purchase

The effect is that all income from the property is treated as belonging to the parent for Income Tax purposes (subject to a general exemption for income not exceeding £100 per annum).

Where a ‘bare trust’ is used, the parent will be taxed on all of the rental profits at their top rate of Income Tax.

If a more formal trust is used, the parent will be taxed on any sum which would otherwise have been treated as the child’s income. With a life interest trust, this would again effectively be all of the rental profits. A discretionary trust could retain some of its profits, but this will not really help as profits in excess of £1,000 will be taxed at the higher ‘trust rate’

To avoid the settlements legislation would require the support of other family members, typically the child’s grandparents. If grandparents gift the property or pay the deposit, the settlements legislation is not triggered.

If parents contribute in any way to the running of the property (e.g. paying a utility or repair bill), there is a strong chance that the settlements legislation will be triggered. This could happen all too easily, especially if a ‘bare trust’ is being used where the parent may be the legal owner of the property and thus legally responsible for it.

Consider, therefore, ensuring that your child’s benefactor puts sufficient additional funds within it, as working capital, to ensure that you never have to make any contribution to the property.

Capital gains tax

If the property that’s put in a trust increases in value then capital gains tax will be charged against this gain. The person who’s responsible for paying capital gains tax depends on the situation. Upon putting the property into a trust, capital gains tax is paid by the person selling the property or the settlor. If the trustee then transfers or sells the property on behalf of the beneficiaries, they need to pay capital gains tax. Once the beneficiary becomes completely entitled to the property, they are then responsible for capital gains tax based on the current market value

Inheritance tax

Inheritance tax is due at the time of transferring property into a trust – at a rate of 20%. Trusts also occur 10-yearly inheritance tax charges. When the trust ends inheritance needs to be paid again in the form of exit charges.

It is always worth bearing in mind that if an asset is gifted and the donor survives for seven years the gift is free of inheritance tax. This is known as a Potentially Exempt Transfer (PET).

If you need further legal advice on gift, setting up a trust and estate planning matters, please get in touch with us at 020 8240 9018 or

Trust & Estate Planning

The person who transfers assets into the Trust, is called the Settlor. They can also be a Trustee. For legal reasons – if you want the Trust to be able to sell property – you should have at least two Trustees up to four. Beneficiaries of Trusts can also be Trustees. Trusts can last for up to 125 years and beneficiaries can be added in the future. It is also possible to add assets to a Trust after it has been established.

Should I set up a Trust? 

Trust planning is largely ineffective if the Settlor retains any rights in the property, such as a right to rental income or a right to occupy the property. If the Settlor does retain an interest in the property, then on their death that asset is still counted as part of their estate for IHT purposes.

Transfers into a Trust work best with property that is not mortgaged, because the mortgage lender may have the legal power to block the transfer, (or charge a participation fee); and the trustees may become chargeable to stamp duty land tax (or its equivalent) for having agreed to take over the burden of the mortgage when they take over the property. A similar charge could arise on transfer out as well.

Inheritance Tax

There is an Inheritance Tax charge of 20%, payable when assets are transferred into a Trust.

If you survive for 7 years after transferring assets into a Trust, the value of those assets is excluded from your estate, so you can save 20% IHT (the IHT rate on death is currently 40%). However, if you retain an interest in those assets, their value is included in your estate.

There is no IHT payable on the first £325,000 of someone’s estate, so if you transfer assets into a Trust 20% IHT is payable only on the value of the assets above £325,000 of nil rate band. A surviving spouse can have their late husband or wife’s unused nil rate band added to their nil rate band, taking the amount potentially to £650,000.

Trusts also incur 10-year anniversary charges.

Broadly, on each 10-year anniversary the Trust is taxed on the value of the Trust less the nil rate band available to the Trust. The rate you pay on this excess is 6% (calculated as 30% of the lifetime rate, currently 20%). If the value of the Trust is less than the nil rate band, there will be no charge.

There is also an Inheritance Tax exit charge whereby IHT is charged up to a maximum of 6% on assets (e.g., money, land or buildings) transferred out of a trust – a transfer out of a trust can occur when the trust comes to an end or some of the assets within the trust are distributed to beneficiaries.

Income Tax

Income realized on assets inside a Trust is subject to income tax. If income is not distributed to beneficiaries then tax is paid by the Trust every year. If beneficiaries receive distributions from a Trust, they will usually be taxed individually on this income. 

Capital Gains Tax

Trusts are taxable entities; however, preferential capital gains rates can be used. Trusts can also offset capital gains and a set amount of ordinary capital losses, while carrying excess loss into future tax years. Trusts can offset capital gains through capital losses, and they can carry over excess losses that go beyond the cap to future tax years. These losses cannot be passed through to beneficiaries.

Payment of IHT

You must pay Inheritance Tax on transfers into a Trust (or out of a Trust known as ‘exit charges’) no later than 6 months after the end of the month the transfer was made. The 10-year anniversary charge can be paid up to 6 months after the 10th anniversary of the date the Trust was set up. There are three steps to paying IHT on transfers into trusts.

• Get your Inheritance Tax payment reference number at least 3 weeks before you want to make a payment by filling in Form IHT122.

• Send Inheritance Tax Account form IHT100 to HM Revenue and Customs (HMRC).

• Pay the Inheritance Tax, either through a bank or building society or by cheque through the post.

Registration of Trusts 

Trusts must be registered with HMRC to comply with anti-money laundering regulations. All trustees are equally legally responsible for the Trust, but you must nominate one ‘lead’ trustee to be the main point of contact for HMRC. The lead trustee will receive the trust’s Unique Taxpayer Reference.

If you require advice or assistance with setting up and registering a Trust, our Private Client solicitors will help you. Please get in touch with us on 020 8240 9018 or submit the enquiry form on our website.

What is a Grant of Representation?

What is a grant of representation?

A ‘grant of representation’ is the generic term for the legal order issued by the probate court in the estate of a deceased person in England and Wales. In Scotland a grant equivalent is called a ‘confirmation’. The grant gives legal authority to prove that the executor or administrator (the personal representative) can administer the estate, undertaking tasks such as signing sale contracts or transferring documents for property, closing bank accounts and selling shares.

Types of grant of representation

The two most common types of grant of representation are a ‘grant of probate’ and a ‘grant of letters of administration’:

  • grant of probate is issued when a person has left a will naming an executor (executrix if female) who proves the will through the probate court.
  • grant of letters of administration is issued when a person has not left a will and the person entitled under the rules of intestacy seeks authority to administer the estate.

When do I need a grant of representation?

 Although a grant gives a personal representative the authority to administer the estate, there are certain instances where action can be taken without a grant:

1. Assets passing to the personal representative

Under the Administration of Estates (Small Payments) Act 1965 (and Schedule 7 to the Building Societies Act 1986) the following can be paid out without a grant providing they have a maximum value of £5,000:

  • bank and building society accounts, national savings products, friendly society and industrial and provident society deposit accounts
  • arrears of salary, wages and superannuation benefits where the deceased was an employee of a central or local government department
  • pensions where the deceased was a member of the police, fire authority, air force or army

It should be noted that the legislative figure is £5,000 but for some banks and building societies this figure can be higher depending on their own internal regulations and requirements. Payment is at their discretion and they can insist on seeing a grant.

If a grant is required, it may be possible to release assets before the grant is received to settle the funeral director’s account and to pay any initial inheritance tax due on the probate application. These funds are generally released directly to the funeral director or HMRC and not to the personal representative. They can include:

  • personal assets such as personal effects, household property and cars. If these are not being sold, then they may need to be valued for inheritance tax purposes before being distributed in accordance with the will, letter of wishes or intestacy rules
  • cash

2. Assets not passing to the personal representative

  • Nominated assets – where the deceased has nominated a beneficiary of the asset with an institution, the asset will pass to them after sight of the death certificate.
  • Some jointly-owned assets – each owner has an indivisible share which passes automatically to the surviving owner(s). Care should be taken with property to check whether it is held as beneficial joint tenants which will pass automatically by survivorship or as tenants-in-common whereby the deceased’s equitable share will pass under the terms of their will or intestacy which will require a grant.
  • Gifts in anticipation of death (donatio mortis causa) – these are gifts which are made by an individual immediately before they die and are subject to four conditions. The deceased must have believed he was going to die soon, have made the gift on the condition that he died, have parted with the gift in some way, and the gift must be capable of being given away.

3. Assets which do not form part of the estate

  • Life insurance policies held in trust – these pay direct to the trustees of the policy.
  • Death in service benefit from an employer – this is usually a payment to either beneficiaries named by the deceased on a letter of wishes or at the discretion of the employers.
  • Lump sum pension benefits – this is usually a payment to either beneficiaries named by the deceased on a letter of wishes or at the discretion of the pension company.

Do I need a grant of representation?

 Administering the estate without a grant of representation may be possible in some circumstances and may save time and money, but it may also be beneficial to obtain a grant in any case to prove the deceased’s last will. It should be noted that claims issued under the Inheritance (Provision for Family and Dependants) Act 1975 must be made within six months from the date of issue of the grant, and this is a key reason for a personal representatives to obtain one.

If you have any enquiries in relation to the probate or a grant of representation, please contact our private client solicitors on 020 8240 9018 or submit the enquiry form on our website.


Challenging a Will

How to challenge someone else’s will?


All wills must comply with the Wills Act or they will be invalid.

For a will to be legally valid, the testator (will-maker) must:

  • be 18 or over
  • make it voluntarily
  • be of sound mind
  • make it in writing
  • sign it in the presence of 2 witnesses who are both over 18
  • have it signed by 2 witnesses, in their presence

The testator must either sign in the presence of two witnesses or acknowledge to the witnesses that it is their signature on the will. Each witness must then sign the will themselves. They also need to give their name, address, and occupation. However, they don’t have to read the will or know what’s in it. 

The testator and the witnesses must sign the same document. When the testator signs their will, both of the witnesses must have a clear view of them and the act of signing. A testator can ask someone to sign on their behalf if they are unable to do it themselves. When the witnesses sign the will, the testator must have a clear view of them and the act of signing. If any of these rules are not complied with the will is invalid and fails.

The burden of proof that the will is invalid lies with the contestator who is challenging the will.

Undue Influence 

A testator must not have been subjected to undue influence when making their will i.e. they must not have been pressurised to make or change their will. The burden of proving that a will-maker was subject to undue influence is with the person who is challenging the will and it is necessary to have evidence in support e.g. statements from people in the will-maker’s everyday life, as well as experts, such as GP’s.


This is when a signature is altered or forged or when a will has been destroyed. One of the most common allegations of fraud is that the signature on a will is a forgery. To successfully argue that a signature on a will has been forged it is usually essential to obtain expert handwriting evidence to support the allegation. The handwriting expert will look at examples of the testator’s handwriting and compare these to the handwriting and signature on the will. They may also be able to use forms of testing on the will to see if the signature is genuine and made on the date it was supposed to be.

A will could also be fraudulent where a person makes provision for a beneficiary on the basis of someone telling them lies and misrepresenting the true position so that the beneficiary inherits, often at the expense of someone else. Another example of fraud would be where a person makes a will pretending to be someone else. In that situation the signature on the will would also be a forgery.

Contact our Private Client Solicitors

If you have any enquiries in relation to making a will or challenging someone else’s will, please contact our private client solicitor on 020 8240 9018 or submit the enquiry form on our website.