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Protect your spouse.
Preserve for your children.
When you want your spouse to be secure after your death, but also want to ensure your children ultimately receive your assets, a life interest provision offers a middle path. Particularly common in second marriages and blended families.
What is a life interest?
A life interest (sometimes called an occupation right or life tenancy) allows one person to use or benefit from property during their lifetime, with the property then passing to someone else when the life interest ends.
The person with the life interest doesn't own the property outright. They have the right to use it or receive income from it, but the underlying ownership belongs to the "remaindermen" (the people who will ultimately receive the asset).
How a life interest works.
Your Asset
e.g., Family home
During spouse's lifetime
Right to live in or use the property rent-free
When life interest ends
Full ownership passes to children
Common scenarios.
Second marriages with children from first marriage
You want your new spouse to have a home for life, but want the house to pass to your children from your first marriage after your spouse dies or moves on.
Protecting children's inheritance
Without a life interest, your spouse might inherit everything and then leave it to their own children or a new partner, bypassing your children entirely.
Balancing competing family interests
Your children may worry about their inheritance while your spouse needs security. A life interest addresses both concerns.
Investment portfolios or farms
Your spouse can receive income from investments or a farming operation during their lifetime, with the capital passing to children afterward.
Triggering events.
A life interest usually ends on death, but your will can specify other events.
Practical considerations.
Who maintains the property?
Your will should specify who is responsible for rates, insurance, and maintenance. Usually the life interest holder pays day-to-day costs, while major repairs may be shared.
Can the property be sold?
Usually the life interest holder cannot sell without agreement from the remaindermen. However, your will can include provisions for replacement property.
What about renovations?
Major improvements usually require agreement from all parties, as they affect the asset the children will eventually receive.
Potential for conflict
Life interest arrangements can create tension between your spouse and children. Clear drafting and open family communication before your death can help prevent disputes. Consider whether all parties understand and accept the arrangement.
Legal considerations.
Relationship property
A life interest provision may interact with your spouse's rights under the Property (Relationships) Act 1976. For longer relationships, your spouse may have rights to relationship property that could affect your estate plan.
Family Protection Act claims
Your spouse and children can claim under the Family Protection Act 1955 if they believe they weren't adequately provided for. A life interest might be challenged if it leaves your spouse in a difficult position.
Tax implications
Life interest arrangements can have tax consequences, particularly for income-producing assets. Your lawyer and accountant should review the structure.
Key Takeaways
Related Guide
Follow our step-by-step guide to creating a will, including complex provisions like life interests.
Read the Creating Your Will GuideRelated Reading
Estate Planning for Blended Families
Blended families face unique estate planning challenges. Learn how to provide for your spouse while protecting your children's inheritance.
Understanding Family Protection Act Claims
Family members who feel inadequately provided for in a will may have grounds to challenge it. Understanding this area of law helps both potential claimants and executors.