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Although this section of your training is short, it is very important as Life Interest Trusts are required by many of our clients and it is important to understand when they may be required. 
In brief, if your client wishes to ring fence their share of, for example, the family home, so that if they die and their spouse remarries they can be sure that their children will still receive the inheritance the testator feels is due to them, then we can include an instruction for a Life Interest Trust within the will. This will ensure that although, on the death of the Testator, ownership of the property will pass immediately to the children, the surviving spouse will have the right to remain living in the property until his or her death or remarriage (depending on the stipulations in the will). If the client wishes to include such provision in the will it is vital that they confirm that they own the property as tenants in common rather than joint tenants. If they are joint tenants they can easily change the status to tenants in common by submitting a SEV form to the Land Registry. 
 
It is worth noting that if a client chooses to write a life interest trust into their will, the passing of the property to children will not count as a direct gift or transfer. This means that the client would no longer be entitled to the Residence Nil Rate Band (RNRB), which is in addition to the main Inheritance Tax allowance, as this applies to clients leaving their main residence DIRECTLY to children and not via a Trust. The RNRB is currently £100,000 per individual, increasing to £125,000 in 2018/19, £150,000 in 2019/20 and £175,000 in 2020/21. If this is of concern to the client, we recommend they take financial advice. 
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