Life Interest Trust for 2 properties and unmarried couple

Trusts Discussion
1

I am hoping this is an easy question for some to answer.
I have instructions from an unmarried couple who own their own properties. They both wish to change the title deeds on each property as Tenants in Common on a 50/50 equal basis in each other names and each other being the life tenant with remaindermen in place .
Can this be achieved under a life interest trust? One of the properties is their family home and the other is being rented out. The property which is being rented out has a mortgage with it
Thank you for your time

2

It certainly could be done. But you will have to consider:

  • a chargeable CGT disposal on the rental property
  • a GROB issue on the family home
  • mortgage issues as the bank may not like the trust deed
  • SDLT?
3

Don’t forget that if there are children of the first to die then giving each other life interests will result in those children not benefiting from the RNRB for their parent’s share when the survivor dies. Marriage is the solution!

Patrick Moroney

4

Thank you both so much

5

Interestedly I have a similar situation with an unmarried couple with no children. They each have properties in their sole names and do not wish to change this. However, they wish to leave a life interest to each other in their Wills, with the remaindermen being relatives. I am correct in stating that IHT will be payable on the first death, including the property left on a life interest? And a potential double taxation on this property on the second death? Thanks in advance.