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.