Life Interest Trust

For many of us, our home is our main financial asset which we have worked hard for and wish to ensure that it passes to our chosen beneficiaries.

A Property Life Interest Trust can be included in your Will to allow you to protect your home which you hope to pass on to your family. Many couples create mirror Wills leaving everything to their surviving partner and then on the second death to their children or grandchildren. However, this can cause issues in the future for chosen beneficiaries should the surviving partner change their Will or require care.

How does a Property Life Interest Trust work?

In your Will, you leave your share of the property to your chosen beneficiaries, subject to your partner having the right to use and enjoy the property throughout their lifetime.

The trustees, typically your surviving partner and chosen beneficiaries, look after your share of the property. The terms of the trust are set out in your Will, but typically detail the following: –

  • Your surviving partner can live in the property for the rest of their life uninterrupted provided they pay all outgoings in respect of the property, keeps it in good repair and insured.
  • The property can only be sold with the surviving partners consent, if the surviving partner has lost capacity to give consent or has died, or if the surviving partner does not comply with their obligations.
  • If the surviving partner needs to move house, the property can be sold, and the entire sale proceeds can be used to purchase a new property which will be subject to the Life Interest Trust. Any sale proceeds not used to purchase a new property are paid into a trust bank account with any income (interest) paid to the surviving partner. The capital in the trust bank account will not be used to pay the survivor’s care fees.
  • When the surviving partner dies, the share of the property which passed into the trust will be distributed in accordance with the Will of the first to die. The share retained by the surviving partner will pass according to their own Will.

Advantages of a Life Interest Property trust

An advantage of including a Life Interest trust in your Will is that it gives you the certainty that your share of your home will be passed onto your chosen beneficiaries, and this cannot be undone by your surviving spouse, whilst in the meantime allowing your spouse to use and enjoy the property throughout their lifetime.

Another important benefit of including a Life Interest Property Trust in your Will relates to care costs. If you leave your entire estate to your partner and they need care, all their assets will be considered when calculating how much your partner must pay towards their care.

A Property Life Interest Trust protects your share of the property from being included in this calculation, protecting it for your chosen beneficiaries.

How we can help

If you do not have a Will or your current Will does not include a Life Interest Property Trust, our team is on hand to help guide you through the process. For more advice or to arrange an appointment, please call 01925 418 004 or contact us online.