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Life Interest Trusts.

6th October 2016 by Kate Mansfield

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It is often the case for married couples, or couples in a registered civil partnership, to want to do a straight forward Will leaving everything to the survivor of them. By doing so the couple would have to accept that the survivor is then free to change their Will after the first death. There is no guarantee that if you have previously agreed who the ultimate beneficiaries will be, that those beneficiaries will actually receive what you intended.

There may be concern, for several reasons, that a straight forward Will might not fulfil all requirements. There might be concerns for a younger couple with children who appreciate that if one of them dies then the survivor may well remarry.  Understandably they might wish to protect the first to die’s assets to ensure that they pass to the children.

A couple may well divorce and re-marry and be concerned to protect their children from previous relationships.

Of course, each party will wish to still ensure the security of the survivor and it is for this reason that a Life Interest Trust can often provide the answer.  Rather than assets passing out right to the survivor, with the survivor then being free to dispose of them during their lifetime or by Will, the first to die’s assets could instead pass into a Life Interest Trust.

The survivor would be given a right to live in a property owned by the Trust, or to receive an income from any capital assets within the Trust.  In addition, it is possible to give the Trustees overriding powers to appoint out capital to the survivor in which case it would be sensible to have an Expression of Wishes guiding the Trustees in relation to the circumstances under which you would be happy with the survivor receiving capital.

The survivor may well wish to move and there would be no problem with this. The Trustees could sell the trust property and all or part of the proceeds could be used to purchase a substitute property for the survivor to live in.  Any capital released could then be invested to produce an income for the survivor.

You can therefore maintain the security of the survivor and provide flexibility should the survivor wish to move.

Ultimately, however, on the survivor’s death the survivor does not control those assets and instead those assets will revert to the first to die’s chosen beneficiaries.

Another reason for considering including a Life Interest Trust in your Wills is to try and protect assets should the survivor need care. If all of the assets are left to the survivor absolutely on the first death then all of those assets would be available to fund care. It may be that you wish to try and preserve some of the assets for the ultimate beneficiaries.

 

Kate Mansfield

Partner — Private Client

Direct dial: 01202 755981
Switchboard: 01202 755980

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  • “We have had the pleasure of Kate’s sensitive and unwavering professional support for a number of years. She has always been able to combine her deep expertise, with practical context and a tone of voice that gently escorts you through, often difficult decisions. We could not recommend Kate highly enough, both professionally and personally ”

    Simon Bennett

  • “We have always known that our legal matters have been in very safe hands with Laceys and Kate Mansfield who handles her clients’ needs with such grace. In recent years we have had to deal with two complicated probates and Kate has dealt with them in a compassionate and totally professional manner. This has made the two emotional journeys so much more bearable for all the family.”

    Joy Eveleigh

  • “I found Kate and her secretary Diane both charming, friendly and very helpful. ”

    Edna Marcella Collier

  • “We have always found that in addition to her legal expertise, Mrs Mansfield is always easily and readily available and it is likewise easy to discuss legal and personal relevant matters with her.”

    Justin Clark

  • “Recently dealt with my extensive will very satisfactorily. ”

    Mrs Ann Gibbs

Kate heads up our Private Client team having been at the firm for over 22 years. She handles a mixed caseload of Wills, administration of Estates, powers of attorney and trust matters as well as specialising more in tax planning.

Kate enjoys the personal side of the work and the satisfaction of assisting the bereaved and families with complex affairs, whether it be complex financial aspects or those where a diplomatic hand is required. She prides herself on being able to explain the legal position in plain English.

Out of the office she enjoys keeping fit. She enjoys going to the gym, has recently acquired a new road bike and is kept busy with an active Hungarian Vizsla. Cooking, particularly baking, is also a passion.

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