Life Interest Trust Wills
Many people in don’t realise that you can own property with other people in different ways. The way you own your property can have a significant impact when writing your Will. There are two main ways of owning a property jointly. These are known as Joint Tenants and Tenants in Common.
How do Joint Tenants vs Tenants in Common differ?
If you own your property with someone as Joint Tenants it means that, upon death, the ownership of the property passes to the surviving owner and it does not pass under the terms of your Will. However, if you own your property with someone as Tenants in Common, it means that you own a specific share of the property, which means that, upon death, the share of the property that you own can be included in your Will and go to the beneficiaries you choose. As Tenants in common you can make a Life Interest Trust Will.
Life Interest Trusts For Couples
These types of Wills can be useful for older couples who want to prevent the whole of their property being used to pay care fees, or for younger couples to ensure that the deceased’s share of the property benefits their children and not the survivor’s new spouse should they remarry in future.
How does a Life Interest Trust Work?
A Life Interest Trust Will protects your share of a property, placing it into a trust after your death. Your surviving spouse or partner retains the benefit of using your share of property for the rest of their life, but importantly without giving them ownership of it. After their death, the trust can be wound up and your share of the property is passed to your named beneficiaries, normally your children or other family members.
How Does A Life Interest Trust Protect A Couple Against Future Care Fees?
If the survivor of you both has to enter residential care, a financial assessment will be used to calculate their ability to pay fees. Currently, if their total assets are greater than £23,250, they will have to pay their full care fees. If your surviving spouse received your share of the property, then the whole of the value of the property would be considered in the financial assessment and in these circumstances, your surviving spouse will pay care fees until their assets fall below £23,250. If, however, your share of the property was placed into a Life Interest Trust, by your Will, then your share of the property would not be considered in the financial assessment. In these circumstances your share is ring fenced and can be passed on to your children or other named beneficiaries after your surviving spouse or partner has died.
How does a Life Interest Trust Protect Your Children If Your Spouse Remarries
If you die and your property passes to your partner or spouse there are a number of issues which you may wish to consider. The survivor could intentionally or unintentionally leave everything to their new spouse after they die, potentially leaving nothing for your children. Your share of the property is ring fenced and can be passed on to your children or other named beneficiaries after your surviving spouse or partner has died.