Flexible Life Interest Wills

We find that the vast majority of our married or co habiting clients want to protect the assets which they have worked hard to accumulate over the years, to ensure that they reach their intended beneficiaries. The most common concern voiced to us is that the survivor of a couple might remarry after the first death, with the consequence that assets do not pass to the next generation. This is especially common if clients have already been married and divorced in the past, with children from different sides of each family line.


In such a scenario a Flexible Life Interest Will offers you an opportunity to plan and protect your assets.


A Flexible Life Interest Will, is a Will which provides that, when the first of a couple dies, all the deceased’s assets pass into a trust rather than given outright to the survivor. The Trustees (who manage the assets held in the trust) hold the assets to pay the income generated by the trust to the survivor for the rest of their life. The survivor has what is called ‘a Life Interest’. This could include the right for the survivor to occupy the matrimonial home.

 

The Life Interest will generally continue until the survivor dies. However with a Flexible Life interest, the Trustees do have the power to rearrange the capital and income during the lifetime of the survivor, if you so wish. This is generally governed by a letter of wishes written by you to set out your views about how you want the Trustees to manage things after you have died. The letter normally provides for your spouse/partner to live comfortably for the rest of their life and then for monies to pass to your children.

 

Your spouse/partner is only entitled to occupy the matrimonial home and/or entitled to income from the Trust. The underlying capital assets remain safe in the hands of your trustees for you children.

 

If there is a remarriage or new relationship after you have died, the new spouse or partner has no claim against the trust fund. The right to income for the survivor spouse can also be removed by the Trustees at that point, if they believe this to be appropriate. The Flexible Life Interest Will therefore allows you to provide for your spouse/partner but also to have the reassurance that your children will ultimately benefit from your estate.

Flexible Life Interest Wills do not cause an Inheritance Tax (IHT) problem if you are married or in a civil partnership. There is no IHT to pay when the first person dies, and the deceased’s IHT allowance will pass over fully to the survivor, so there is a “double” allowance for IHT purposes. If there is a rearrangement of capital in the trust and the survivor lives for seven years after the rearrangement, this will essentially be free of IHT and the survivor will still have a double allowance available.


A Flexible Life Interest Will can also offer protection if the survivor of you needs residential care. The assets in the trust are not be taken into account when assessing the survivor’s ability to pay for care.

 

 

Wills Jacobsen are authorised and regulated by CILEx Regulation for Probate: Authorisation Number 2164535. Read the CILEx Code of Conduct

Wills Jacobsen is the trading name for Wills Jacobsen Legal Ltd

 

Company number: 09511808

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Registered office:

 

1 Broughton Business Centre, Causeway Road,

Broughton,

Huntingdon,

PE28 3AR