Life Interest Trust wording

Hi All,

Hoping someone can help…

I have been presented with a Will containing a straightforward life interest trust. The life interest wording is silent on whether the life tenant is entitled to the income from the trust for life. Reads as a right to live in the property for life.

Husband has died leaving wife with a life interest in their property (held as tenants in common) with remainder interest to their children.
Wife is now moving into care and there is debate as to whether the life tenant is entitled to the income from the property and/or the income from the invested sales proceeds if the house were to be sold and the deceased’s share invested.

I am assuming it is implicit in the life interest, unless there is express wording to the contrary, that the life tenant retains a right to the income for life as well as a right to occupy?

Any help would be much appreciated.

Thanks in advance.

Henry Straw
April King Legal

You really need to provide the wording. In what way does it read as a right to live in the property rather than a life interest in the fund as a whole.

Andrew Goodman
Osborne Clarke LLP

A “right of residence” trust is subtly different from a “life interest”. It is not uncommon to see a spouse being given a right to reside in a particular property, but without the right to receive the income from the proceeds of sale.

Sometimes there is a provision allowing for a change of property and the question is then: what happens to the balance which is not needed for the new purchase? With a “right of residence”, the remaindermen get the balance; with a “life interest” the balance is invested and the spouse gets the income from those investments. You have to look very carefully at how the Will is drafted in order to determine which it is.

As it happens, for IHT purposes, a “right of residence” is normally treated the same as a “life interest”, which can lead to assumption that the two are the same - which they aren’t.

Paul Davidoff
New Quadrant Partners Ltd