What is a Life Interest in Property Trust?

Imagine ensuring that your spouse can continue living in your family home without any worries after you pass away.

A Life Interest in Property Trust enables exactly that.

In this legal arrangement, trustees manage your property, allowing your spouse, known as the life tenant, to use the home for their lifetime.

After your spouse dies , the property can then be passed on to other family members, such as your children.

This trust provides excellent security for your surviving spouse and ensures clear asset transition to your next of kin.

Who Owns the Property in a Life Interest in Property Trust?

Although trustees legally own the deceased’s share of the property, they do not control your spouse’s daily life in the home.

As the life tenant, your spouse enjoys all the benefits of ownership, such as living in, maintaining, and using the property as their own.

The trustees’ role is to manage the property according to the trust’s terms.

This structure ensures the property’s intended use and offers peace of mind to both you and your spouse.

Example Scenario

Consider John and Jane, a happily married couple with grown children.

John wants to ensure that if he passes away first, Jane can continue living in their family home.

However, he also aims to protect his share of the property if Jane needs care later, maximising the children’s inheritance.

They establish a Life Interest in Property Trust, placing John’s share of the house in it, with Jane as the life tenant and their children as the ultimate beneficiaries.

Jane continues to live in the home, maintain it, and host family gatherings, as she always has.

If Jane decides to downsize, the trustees will assist her in selling the house and purchasing a new one, keeping the trust in effect.

This flexibility allows Jane to live comfortably and securely.

When Jane eventually passes away or moves permanently into care, the house passes on to their children.

This fulfils John’s wishes to care for Jane and secure a legacy for their children.

It also protects John’s half from any changes Jane might make to her Will in the future.

Naturally, Jane would do the same the other way around.

Conclusion

A Life Interest in Property Trust is a powerful tool for estate planning, ensuring your loved ones are cared for and your assets are distributed as you wish.

It’s written into an upgraded will and doesn’t come into effect until one of you dies.

If not done already splitting the property into Tenants in Common is required and our Advisers can do this for you.

If you’re considering this type of trust, consulting with an expert can help customise it to your family’s specific needs and goals.

This trust can be especially effective when combined with Severance of Tenancy, as explained in last week’s article –

Severance of Tenancy: Protect Your Home and Estate in England. (beaconadvice.co.uk)