Life interest trusts
Date Posted: 12/09/2008
This type of trust enables a person or persons of your choice to receive the income from your estate during their lifetime. Upon their death the trust comes to an end and the capital is passed to the ultimate beneficiaries of your choosing.
Trusts of this kind are often useful when you wish to give your spouse or co-owner a right to live in your property and then to ensure it passes to your children. This type of trust is suitable in a situation in which you wish to provide for your children from a previous relationship as well as your current spouse.
You may wish to include a Life Interest Trust or Protective Property Trust in your Will if: You do not wish to leave your share of your property to your Partner but would like to give them the right to live in the property for the rest of their lives, before the property passes to your children.
A Life Interest Trust or Protective Property Trust in your Will can contain a provision that upon your death, your share of the property is put in trust allowing your partner to continue to live in the property for his/her lifetime, but upon his/her death, to be given to your children. In this way, you can make provision for your partner, whilst protecting your share of the property for your children.
If you are worried that you may need nursing home care in the future, when your local authority may have the right to sell your home and use the proceeds to meet the costs of your care. You cannot transfer your property to relatives to avoid paying nursing home fees, without falling foul of the law, but you can include a Life Interest Trust or Protective Property Trust in your Will, containing instructions that upon the death of you or your spouse, that a 50% share of the property is put in trust for your children, instead of passing direct to the surviving spouse. In this way, the 50% share of the property that has been put in trust is protected and the surviving spouse may continue to live in the property. On the death of the surviving spouse, the half share of the property owned by the trust can be given to the children.