Life Interest Trusts: Protecting Your Home and Family

August 28, 2026

A Life Interest Trust is a way of leaving someone the benefit of an asset, most often the right to live in your home or to receive income from your investments, for the rest of their life, while making sure the asset itself eventually passes to the people you choose. It is one of the most useful tools available for providing for a spouse or partner without giving up control over who ultimately inherits. At Tayntons Solicitors in Gloucester, our trusts and lifetime planning team advise families across Gloucestershire on whether a Life Interest Trust is the right choice for them.

What is a Life Interest Trust?

A life interest trust (also called an interest in possession trust) is a legal arrangement in which one person, known as the life tenant, has the right to benefit from certain assets during their lifetime, while other people, known as the remaindermen, are entitled to the capital once that right ends.

The life tenant does not own the assets. They have the right to use them, or to receive the income they produce. That might be the right to live in a property rent-free, or to receive the interest and dividends from invested money. When the life tenant dies, or in some cases on an earlier event such as remarriage or a permanent move into residential care, the trust ends, and the capital passes to the remaindermen.

A Life Interest Trust in your Will is the most common form. It allows you to provide for a surviving spouse or partner while ring-fencing the underlying capital for your children or other chosen beneficiaries. You can read more about our wider trusts and lifetime planning services for guidance on the other types of trust available.

The key roles in a Life Interest Trust are:

• Settlor: the person who creates the trust and sets its terms, through their Will or during their lifetime.
• Life tenant: the beneficiary entitled to the income from, or use of, the assets for life.
• Remaindermen: the beneficiaries who receive the capital once the life interest ends.
• Trustees: the people responsible for managing the assets in line with the trust and the law, acting fairly between the life tenant and the remaindermen.

How does a Life Interest Trust protect assets for beneficiaries?

A Life Interest Trust protects assets for beneficiaries by separating the right to benefit from an asset from the ownership of the asset itself. Because the life tenant never owns the capital, it stays ring-fenced for the people you have named. In practice, this offers protection in three main situations.

• Protection against sideways disinheritance. If you leave everything to your spouse or partner outright, they are free to change their own Will later, or to remarry, and your children could end up inheriting nothing. A Life Interest Trust lets your partner benefit from your share of the home for life, while guaranteeing that your share ultimately passes to the beneficiaries you have chosen. This is especially useful in second marriages and blended families.
• Some protection of the family home against care fees. If a couple own their home as tenants in common and each leaves their share into a Life Interest Trust, only the surviving partner’s own share is normally counted if that partner later needs to fund residential care. The share held in trust is generally left out of their financial assessment. This is not a guaranteed way to avoid care fees, because a local authority can investigate a deliberate deprivation of assets and the trust must be set up for genuine estate planning reasons, so it is essential to take advice first.
• Keeping capital out of a beneficiary’s direct control. Holding capital in trust, rather than handing it over outright, can offer a degree of protection where a beneficiary is vulnerable, is not used to managing money, or experiences financial difficulty. It is not an absolute shield. A court dealing with divorce or bankruptcy can, for example, take a trust interest into account. It does, however, give you more control than an outright gift.

An important practical point is that, for a property to pass through a Life Interest Trust in your Will, it must be owned as tenants in common, not as joint tenants. Where a home is held as joint tenants, it passes automatically to the surviving owner on death and never reaches the trust. Tayntons can advise on changing how your property is held so that your planning works as intended.

Who pays IHT on a Life Interest Trust?

For a Life Interest Trust created in your Will, known technically as an immediate post-death interest, Inheritance Tax is dealt with in two stages.

On the first death, when you die, and the trust begins, the assets you leave into the trust are treated as passing to the life tenant. If the life tenant is your spouse or civil partner, that transfer is exempt from Inheritance Tax under the spouse exemption, so there is usually no Inheritance Tax to pay at this stage.

On the second death, when the life tenant dies, the value of the trust assets is added to their own estate for Inheritance Tax purposes, as though they had owned it. Any Inheritance Tax due is then shared: the trustees are responsible for the tax attributable to the trust assets, and the personal representatives pay the tax on the rest of the estate. You can find out more through our estate protection and inheritance tax planning service.

This treatment applies to trusts created in a Will. A Life Interest Trust set up during your lifetime on or after 22 March 2006 is usually taxed differently, under the relevant property regime, which can involve a charge when assets go into the trust, a charge on each tenth anniversary, and further charges when assets leave. Because the rules turn on how and when the trust is made, the tax position should always be checked for your own circumstances.

Income tax: the life tenant is entitled to the income the trust produces. The trustees pay income tax at the basic rate, and the life tenant then accounts for that income at their own rates, with credit for the tax the trustees have already paid, reclaiming any overpayment if their personal rate is lower. There is no special low rate of tax simply because the income comes through a trust.

Capital gains: because the trust assets are treated as part of the life tenant’s estate, they usually benefit from a Capital Gains Tax uplift to their market value on the life tenant’s death, so gains built up during the trust are not charged at that point.

Can a Life Interest Trust be revoked?

While you are alive, a Life Interest Trust in your Will can be changed or removed at any time. A Will has no effect until death, so you are free to update it whenever you wish, provided you have the mental capacity to do so.

Once the trust has taken effect on your death, it generally cannot simply be revoked. It is not, however, always set in stone. It may be brought to an end or altered in several ways:

• by a Deed of Variation within two years of the death, if the beneficiaries agree to redirect what they receive. Done correctly, this can be treated for tax purposes as though the Will itself had made the change;
• under the rule in Saunders v Vautier, where all the beneficiaries, the life tenant and the remaindermen, are adults of full mental capacity and, between them, entitled to the complete trust fund, so that they can agree to end the trust and share the assets;
• through the trustees’ own powers, if the trust document gives them power to bring the trust to an end or to advance capital to beneficiaries; or
• by an application to court, for example under the Variation of Trusts Act 1958, where some beneficiaries are minors or not yet born and cannot agree for themselves.

A lifetime trust can be drafted with a power of revocation, but this brings major tax consequences and is rarely appropriate. Advice is essential before relying on any of these routes.

Is a Life Interest Trust right for you?

A Life Interest Trust may be worth considering if you:

• have children from a previous relationship and want to provide for your current partner while protecting your children’s inheritance;
• own your home with someone else and want to protect your share for the next generation;
• want a spouse or partner to have security for life without giving them outright control of your assets; or
• want to provide for someone who is vulnerable or who would benefit from having their inheritance managed on their behalf.

It will not suit everyone. The value of taking advice is in finding the right solution to your circumstances, rather than assuming a trust is always the answer.

How Tayntons can help

Setting up a Life Interest Trust is not a do-it-yourself exercise. The wording of the trust, the way your property is held, and the tax consequences all need to fit together, and small mistakes can defeat the whole plan. Our trusts and lifetime planning solicitors in Gloucester will:

• talk through your goals and explain, in plain English, whether a Life Interest Trust is right for you;
• prepare your Will and the trust provisions so they do what you intend;
• advise on holding your property as tenants in common where that is needed; and
• explain the Inheritance Tax, income tax and care-fee consequences for your situation.

Our team includes members of the Society of Trust and Estate Practitioners (STEP) and Solicitors for the Elderly, and Tayntons holds the Law Society’s Lexcel accreditation. We are authorised and regulated by the Solicitors Regulation Authority. As one of the established firms of solicitors in Gloucestershire, we work with clients across Gloucester, Cheltenham, the Forest of Dean and the surrounding area. You can read what our clients say about us on ReviewSolicitors.

Speak to our trusts and lifetime planning solicitors in Gloucester.

To find out whether a Life Interest Trust in your Will is right for you, contact Tayntons Solicitors today. Call our solicitors in Gloucester on 01452 522 047, email info@tayntons.co.uk, or request a call back and a member of our team will be in touch.