Life-Time Interest Trust
A Life-Time Interest Trust ensures that your asset - often your home or share of your home - is left to your chosen beneficiaries, whilst also meaning someone, usually your spouse or partner can continue to enjoy the asset for the rest of their life.
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Does your partner live with you in a house that you own? Do you want to allow your partner to continue to treat the house as their home if you pass away before them? Do you want to ensure that the property passes to your chosen beneficiaries after your partner passes away? If yes is the answer to these questions then a Life-Interest Trust may be for you.
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Your asset is left in trust to your final beneficiaries such as your children or grandchildren whilst also protecting someone such as your spouse or partner, allowing them to continue to enjoy the asset for as long as they live.
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How does a Life-Interest Trust work?
In your Will you create a Life-Interest Trust for the person who you want to be able to continue to benefit from the asset until the Life-Interest Trust ends, at which point your asset passes to your chosen beneficiaries.
What assets can be put into a Life-Interest Trust
A Life-Interest Trust can be used for any assets that you want to leave in your Will, such as your home, investments or property - the most common asset to leave in a Life-Interest Trust is a house. You may want to allow your partner, friend or spouse to continue to live treat the house as their own until they pass away, or you may wish for someone to receive the income from a buy-to-let property or any other investment while they are still alive.
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How does a Life-Time Interest Trust protect the asset?
The person who you leave the Life-Interest to is known as the Life Tenant. Whilst they will benefit from the asset whilst they are alive, they do not own the asset outright so would not be able to sell the asset without the permission of your named Trustees. If the Life Tenant is means tested for care fees, they do not own the asset so it can't be taken into consideration, and if the life tenant is your spouse or civil partner the asset won't form part of their estate for inheritance tax purposes when they pass away.
When does the Life-Interest Trust end?
A Life-Interest Trust will end when the Life Tenant passes away, however the Life-Interest trust doesn't necessarily have to last a life-time. You can stipulate a set time period, or events that would trigger the trust to end, such as the Life Tenant marrying, moving address or going into care.
What happens at the end of the Trust period?
At the end of the Trust period the asset will be passed onto your chosen beneficiaries.
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If you are interested in discussing the benefits of a Life-Interest Trust please contact us today to talk with one of our friendly, expert, advisors.
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