Life Interest Wills and Trusts
If you have remarried following bereavement or divorce, and have children from a previous marriage, it is possible to ensure the financial security of your current spouse whilst still protecting your children's inheritance.
You may wish to ensure that your current partner is financially secure should you die first, but you feel it is only right that your children from your previous marriage should inherit your assets, particularly if the main asset is the family home which may have been substantially paid for during the previous marriage.
With a standard Will, if you leave everything to your new partner your assets would become theirs. When they die those assets would then be passed to their beneficiaries, who may be their own children, thus depriving your children of any inheritance.
With a "Life interest Will" it is possible to avoid this situation. The family home is a perfect example. You may wish to leave this to your children eventually, but still enable your current partner to live in it after you have died. It is possible to give your partner a life interest in the property, which means that after you die they can live in the property until they die (or remarry if you wish), at which point it passes to your beneficiaries.
In this way you can protect both your partner and eventual beneficiaries.
Benefits of a life interest trust
- You can control the ultimate destination of your assets - whilst your surviving spouse still retains the benefit of the trust in their lifetime, for example by still living in the house or by drawing income from other funds held in trust.
- Care home fee mitigation - funds and assets held within a life interest trust are effectively ring fenced from your spouses assets and cannot be taken into account when assessing your partner for care home fees, thus protecting the 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.
What assets can form part of a life interest trust?
- Property - such as the family home.
- Cash - the survivor can benefit from the income generated by cash assets whilst the capital itself is protected by the trust.
For more information on life interest trust wills contact us to speak to one of our specialist solicitors.
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