Life Interest Trusts in Wills – steps to ensure effective protection of the trust assets: –
A common misconception amongst the lay executor is that the Will ‘is the trust’ and to a certain extent this is true however, with certain trusts more work is required.
- A Life Interest Trust in a Will requires additional paperwork to enable the share of the property under the Life Interest Trust to pass to the trustees (generally the surviving spouse and another). Although the Will confirms who are to be the trustees and beneficiaries the Land Registry Title will still have the deceased’s name registered against it. The trustees will need to confirm that they accept their office as trustees and the trust property will need to be legally passed to the trustees to hold on trust for the eventual beneficiaries.
How is this achieved? Minutes of a Trustee Meeting can be drafted which, in turn, will confirm that the trustees accept their office as trustees. At the meeting, the trustees are able to execute the necessary Land Registry document which will need to be submitted to the Land Registry. The Land Registry will update the proprietorship title for the property to ensure that the trustees are named on the title. Once completed, the trusts share of the property is protected for the eventual beneficiaries.
When do the beneficiaries receive their trust asset? The Life Tenant (generally the surviving spouse) is able to live in the property for the rest of their life. If the property is sold (of which the surviving spouse is co-owner) the surviving spouse and the trustees can purchase another property. Again, the life tenant can have full use and enjoyment of the new property. If there are any excess sale proceeds the surviving spouse will take their share of this outright but will also benefit from income generated from the trusts excess sale proceeds. The new property, of which is part owned by the trust will continue to be held by the trustees along with any excess sale proceeds for the eventual beneficiaries. Upon the death of the life tenant the beneficiaries will then be entitled to their share of the trust asset along with the excess sale proceeds that we held by the trustees.
If you would like further information on how to establish a Life Interest Trust after death please contact one of our team: 01522 581570.