Life tenant's spouse not a beneficiary, what protections to put in place?


(jane) #1

I write as a tax adviser, rather than a lawyer so please excuse my lack of legal expertise.

The deceased (A) created a will trust over his property with a life interest for his retired son and with the remainder going to his grandchildren (GC). The son (B) is planning to move into the property with his younger second wife (W2) of a few years standing and the wife’s adult son (WS) who does not work.
It appears that the will trust was written to protect the interests of the grandchildren (GC), and there is no provision for the son’s wife (W2) or her son (WS).

I can envisage a scenario in some years’ time when the son (B) has died and the trustees wish to obtain possession of the property for the residuary beneficiaries (GC). The wife (W2) and / or her son (WS) may not wish to leave.

What rights might the wife (W2) and / or her son (WS) have acquired over the property? It appears to me that they would not have any rights under the Inheritance (Provision for Family and Dependants) Act 1976 as the property would be governed by the will trust which arose from the will of A and not B. Presumably it would only be B who would be considered to have an obligation to provide for his wife and possibly the wife’s son (WS). Are there other rights that they might have obtained, eg housing rights, protection from eviction rights?

What steps should the trustees take now to make life easier later on? Is it customary for trustees to ask non-beneficiaries to sign a licence before occupation of a trust property? What type of terms would it contain?

One useful piece of information that my researches has identified is that trustees are subject to checking the “right to rent” of all occupiers, and this would include B, W2 and WS. This might be a good starting point for requiring some documentation from all three future occupants.

Thank you for your help. When I have more understanding I will be encouraging the trustees to obtain legal advice to put in place suitable documents to protect the interests of the beneficiaries and the trustees.

Jane Evans
Jane Evans Taxation Limited


(Paul) #2

Jane

No-one has answered yet because this is one of those knotty problems that doesn’t have a neat solution. Trusts of property in which a beneficiary lives are apt to give rise to all sorts of other problems too. I think the short answer to your question is that the son’s wife will not have an entitlement to live at the property and the trustees would be able to evict her but they would have to go through the normal procedure for doing that, the same as what a landlord would, which is going to take time and be costly.

Paul Davies
DWF LLP


(Simon James Northcott) #3

Yes it would be wise to have an agreement with the life tenant and the wife and her son as parties to clarify their status and terms of occupation

The wife and her son would have no rights under the trust and must not be given any beyond being licensees sharing occupation with the son who is entitled to occupy.

Simon Northcott


(smh) #4

An option for B (if he is your client) may be to reach agreement with the grandchildren to bring the trust to an end. He can crystallise his interest and perhaps use his share of the trust to acquire an interest in the property (which he can then pass on to W2) or purchase alternative accommodation.

Samir Hussain
Gregsons


(Jane Livingstone) #5

I am a family lawyer. She may acquire matrimonial home rights for during the currency of their marriage. This is the right to occupy while they remain married. If Husband has a right to occupy and they live together as their main home then she will acquire the right to occupy. You may wish to consider them entering into a post nuptial agreement to make clear the position in terms of the trust.

Jane Livingstone
Knights Professional Services Limited