Life Interest Wills and Trusts
At Sheppersons we are specialists in estate planning. Life interests have a variety of uses and we can advise you on these and how they may be used in planning your estate.
A life interest trust can offer a solution to the problem of protecting your children's inheritance whilst still providing for the current spouse.
Life Interests for Second Marriages
If you have remarried following divorce or bereavement, and you have children from a previous marriage, it is possible to ensure the financial security of your current spouse whilst still protecting your children's eventual inheritance.
Without a life interest, using a normal Will, if you leave everything to your new partner your assets would become theirs when you die. When they then die, those assets would form part of their own estate and would then be passed to their beneficiaries, who may be their own children, thus depriving your children of any intended inheritance.
This situation can be avoided with a Life interest Will.
Property is a good example of where this can be used. You may wish to leave your property to your children eventually, but still enable your current spouse to live in it after you have died.
You can give your partner a life interest in the property, by means of a trust, meaning that after your death they can live in the property until they die (or remarry if you wish), at which point the property passes to your children or other beneficiaries.
In this way you can protect both your partner and eventual beneficiaries.
Benefits of a Life Interest Trust
- You control the ultimate destination of your assets whilst still enabling your partner to benefit from those assets.
- Care home fee mitigation - assets held within a life interest trust are ring fenced from your spouse’s assets and cannot be taken into account when assessing your partner for care home fees, thus protecting those assets.
- Protected against bankruptcy - assets held in the trust cannot be taken in the event of your spouse's bankruptcy as they have no right over the capital.
Which assets can form part of a Life Interest Trust?
- Cash – your spouse can benefit from the income generated by cash assets whilst the capital itself is protected by the trust.
- Consideration of trust should always be done with any Inheritance Tax consequences in mind.
Contact us for more information or to arrange a consultation.