A Life Trust is a trust usually created in your Will (but can be created during your lifetime), which on death, grants your spouse/partner the right to occupy your property until their death (or an earlier predetermined event e.g. re-marriage). If, following your death, the property is to be sold (or rented), the life tenant (i.e. your spouse/partner) is entitled to the income that is generated from your share of the property with the capital balance protected for your ultimate beneficiaries (typically your children).
If you are planning for later life, you may be considering what will happen to your spouse and children on death. You may be concerned that your spouse may need to go into care and that care home fees would deplete the value of the family home, meaning there will be little to nothing for the children or grandchildren to inherit.
Equally, you may be concerned that after death, your spouse may remarry and leave all or part of your estate to their new family.
For both these scenarios, the Life Interest Trust is intended to ring-fence half of the family home, so that regardless of what happens to the survivor's estate, you have peace of mind that your share of the property is protected and will pass to your intended beneficiaries.
If a Life Interest Trust is included within the deceased's Will then it will be the duty of the Executor to deal with the formal transfer of the property to the Trustees and for the same to then be registered at the Land Registry with the appropriate trust restrictions registered against the title.
To do this, the Executors will need to apply for a Grant of Probate or Letters of Administration. Once the Grant has been obtained, the Executors will then have the legal authority to proceed with the implementation of the life interest trust.
When the trust comes to an end (usually on the death of the Life Tenant), the property would either be sold, and the net sale proceeds being divided between the beneficiaries of the life interest trust or, if the beneficiaries are in agreement, the property can be transferred into their name(s).
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