Are you worried that your Will doesn’t protect your home and assets? Are you concerned that your home and assets could be given to someone else after you’ve gone or taken for care home fees? Do you want to make sure that your home and assets are protected and passed to your loved ones after you’ve gone? If so, making a Will with a Life Interest Trust may be the answer.
A Life Interest Trust may be the best way for you to ensure that your loves ones are looked after during their lifetime while also making sure that your assets are protected for future generations.
What are Mirror Wills and what are the potential issues with them?
Many couples will put in place Mirror Wills which typically leave all assets to each other and then, when the surviving spouse dies, all assets pass to their children. These straightforward terms work for most couples, but it can leave a person’s assets unprotected and vulnerable to events in the future, for example:
- the surviving spouse, who has inherited all assets from the deceased spouse, may remarry and not make a new Will and/or change the terms of their Will which may mean that the couple’s assets are left to someone other than the couple’s children. This is called sideways disinheritance and can mean the couple’s children do not end up inheriting the assets as originally planned;
- the surviving spouse, who has inherited all assets from the deceased spouse, may need care and the assets are used to fund the care fees. In this situation, there may not be any assets left, including the home, to pass on to the children when the surviving spouse dies.
A Mirror Will is a perfectly good Will and works for most couples. However, a Will can do more to protect your assets and ensure that your loved ones are looked after in the future. A Life Interest Trust is a good way to do this.
How does a Life Interest Trust in the Will help to protect your assets?
A Mirror Will with a Life Interest Trust essentially helps protect your assets from these situations. On the death of the first spouse, their share of the home is placed into Trust for the Beneficiaries, who would usually be the couple’s children.
Therefore, half of the property is now owned by the surviving spouse and half is owned by the Trust. This means that the surviving spouse can remarry and not make a new Will and/or leave their share of the property to someone else in their Will and/or have their share of the house assessed to pay for care home fees, but the 50% of the property owned by the Trust is protected and cannot be lost to someone else or taken for care home fees.
With a Life Interest Trust, the best-case scenario is that the children inherit all of the property as planned by the couple i.e. both shares of the property pass to the children on the death of the surviving spouse. However, the worst-case scenario is that the children inherit 50% of the property that has been held in Trust following the death of the first spouse. Either scenario is significantly better than the children losing all of their planned inheritance as would happen in the scenarios outlined above.
If I have a Life Interest Trust in my Will, can I stay in the home after my spouse has died?
When the first spouse dies, if there is a Life Interest Trust in the Wills, 50% of the property will be owned by the surviving spouse and 50% will be owned by the Trust. However, the surviving spouse has the right to stay in the property for the remainder of their life. The surviving spouse cannot be moved from the property by the Trustees and/or the property cannot be sold by the Trustees without the consent of the surviving spouse.
Do I have to do anything to put a Life Interest Trust in the Will?
To have a Life Interest Trust in a couples’ Will, the couple must hold their property as Tenants-in-Common. This means that the couple will own, say, 50% of the property each.
However, it is very common for couples to hold a property as Joint Tenants. This means that the couple own the property as a whole and not a share of it i.e. when the first spouse dies, the surviving spouse will automatically inherit the property and become the sole owner.
If a couple hold the property as Joint Tenants and they wish to include a Life Interest Trust in their Wills, then this Joint Tenancy will have to be severed so that they hold the property as Tenants-in-Common. This might sound a complicated procedure, but it is relatively straightforward to do and we will take care of this for you.
How can Leech & Co help you with Wills and Life Interest Trusts?
As always, we will come to your home for all appointments and we can discuss with you whether a Will with a Life Interest Trust is the right thing for you. We will advise you about all aspects of what the Trust means and the potential implications and consequences. If you then wish to make your Wills and include a Life Interest Trust, we will confirm your full instructions, draft your Wills, complete all relevant paperwork and ensure your Wills are correctly executed.
If you would like to discuss Wills with Life Interest Trust, please call for an informal, no obligation chat on 0161 749 9000 or contact us via the website.