Life Interest Trust Wills Case Study
Mr and Mrs H contacted Wills and Trusts Solicitor Nadia Rimmer to review their Mirror Wills. They made their Wills in the 1980s, not long after their children were born and they’d not reviewed them for about 40 years.
They were both approaching 70, with two grown up children and five grandchildren. They jointly owned a mortgage-free property worth around £200,000 and had joint assets of about £30,000. Although they were both fit and healthy, they were worried about the impact of care home fees on their Estate and how this would affect their children’s inheritance. These concerns prompted them to contact Nadia to review their Wills and talk about how they could change their Wills to protect their children’s inheritance.
Mr and Mrs H asked if we still had a copy of their original Mirror Wills. We did have copies, so we invited them in for a free consultation to see how we could help to protect their assets.
How We Helped
Mr and Mrs H met with Nadia Rimmer. In the meeting they asked about transferring their property into their children’s name. Because of the tax implications and because this offers no protection from care home fees because of the deliberate deprivation of assets, Nadia advised them against this.
If you transfer your property to your children whilst you still live there, Local Authorities can claim deliberate deprivation of assets and still take into account your whole property when assessing you for the cost of your care.
Instead of a property transfer, Nadia suggested that they set up Life Interest Trust Wills. To do this, they would have change the tenancy on their property from Joint Tenancy to Tenants in Common. As Tenants in Common, they would each own a 50% share of the property.
This would allow Mr H to add a Life Interest Trust to his Will. By making a Life Interest Trust, he put his share of the house into the Trust as a gift for his children. Mrs H would have the right to live in the property for the rest of her life, which is why it’s known as a ‘Life Interest’ Trust.
The Life Interest Trust would also offer protection for their children’s inheritance. If Mr or Mrs H became ill and needed to go into a care home, the Local Authority could only use half of the property to assess them for care home fees, meaning the other 50% was safe.
Because they had set up a Trust, they had to appoint Trustees to manage it. Nadia helped them decide who to appoint as Trustees. They chose themselves and their two eldest granddaughters.
Nadia also helped Mr and Mrs H to leave a gift in their Life Interest Trust Wills for their five grandchildren, by including them as beneficiaries to part of the property.
Mr and Mrs H were so pleased that they’d decided to take up our offer of a free Will review. This meant they could address their concerns quickly and get their Wills updated so they could feel happy that their wishes would be taken care of when they die. They were surprised that there was a simpler and more efficient way to protect their property and their children’s inheritance.
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