What does a life interest mean?

If your responsibilities are ‘divided’, for example you wish to ensure that your partner is adequately provided for but feel you have a duty towards, say, children from an earlier marriage, then you may wish to consider giving your partner a ‘life interest’ in your Estate. This restricts the partner’s inheritance to the income (interest earned) on your capital or a speciﬁed sum. If you own your home outright or own a share as tenants-in-common then you may also wish to give your partner the right to live in your home perhaps rent-free, until they die, remarry or, for example, only a speciﬁed period.

Once they die or after the speciﬁed event has taken place then your home and/or the capital sum will pass to whoever you have speciﬁed in your Will, such as your children.
You should, however, bear in mind that unless your Estate is fairly large, the income from it may be insufﬁcient to support your partner.
A gift of a life interest can also cause the duties of the Executors and Trustees to be more onerous.
When considering a gift of a life interest, it is very important to remember that the recipient does not own the property or capital sum and therefore cannot dispose of it in his or her own Will. It is also important to remember that the prime duty of your appointed Trustees is to keep a fair balance between income for the person getting a life interest and capital growth for those who will be
ultimately entitled to your Residuary Estate.

In our experience the most common use of a lifetime interest is with a property or share of a property where it is being provided as living accommodation for the surviving spouse or partner while protecting it for the ultimate beneficiaries, most commonly the children of the deceased.