Life interest trust solicitors in Devon
If you are looking for experienced life interest trust solicitors in Devon then we are here to help.
Life interest trusts are becoming increasingly common as a way of protecting succession interests within a family. The rise in popularity of life interest trusts can partly be explained by the prevalence of second marriages and blended families. Life interest trusts can also be usefully deployed when preparations are being made for the possibility of future care home fees.
A life interest trust is frequently incorporated within ‘mirror’ wills made by married couples. The gift of a life interest is made to the surviving spouse by the first to die, rather than leaving them their estate absolutely. When property is held by couples as ‘tenants in common’, rather than as ‘joint tenants’, the use of a life interest trust can have far reaching financial consequences.
The life interest trust allows the assets of the first spouse to die to be placed within a trust so that they do not form part of the survivor’s estate, but whilst still maintaining the important transferable nil rate band between spouses for IHT purposes.
This does restrict the survivor’s use and enjoyment of those assets, so a life interest trust should be considered carefully. However the surviving spouse can continue to live in any property and receive any income the trust monies generate. Trustees can also be given the power to advance some capital if required.
A life interest trust can be specified to apply only to the couple’s home, or to all assets that are owned by the first spouse to die.
The benefit of using a life interest trust is that you can ensure the ultimate destination of your estate, while at the same time making certain that your spouse receives the financial provision they will need during their lifetime. This will protect your estate from the possibility of your spouse remarrying and the assets passing to step children, rather than your own biological children.
Our contentious probate department have recently concluded an inheritance claim on behalf of a claimant whose mother died leaving her estate to his step father, who in turn left everything to our client’s step brother when he died intestate. The case illustrates the sort of problems that can arise with second marriages and the often unforeseen consequences of our inheritance rules in the UK.
A life interest trust can also protect against care home fees. Because the surviving spouse has no right to the capital it cannot be taken into consideration if they find themselves being required to pay care home fees.
Additionally the assets in the life interest trust lie beyond the grasp of a trustee in bankruptcy, should the surviving spouse be declared bankrupt.