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  • Emma Walsh

Why Should You Consider Creating A Lifetime Trust

What is a Lifetime Trust?  

Not everyone wants to wait until they die to pass on their assets to a loved one.

Unlike trusts in wills, which take effect only after your death, a lifetime trust allows you to transfer the ownership of some or all of your assets to a trust while you are still alive. Those assets become the property of a lifetime trust which must be managed and looked after. 

What are the Key advantages to creating one? 

As with all financial products and trusts, there are advantage and disadvantages attached to a life interest trust. Some of the key advantages are: 

  • Protection for your family home against a financial assessment for care home fees. This reduces the impact residential care home fees will have on your estate 

  • You can set up the trust however you please, so you get more control over who gets what 

  • Powers which ensure that capital can be paid to nominated beneficiaries prior to the death of the surviving spouse 

  • Most lifetime interest trusts can be converted into different types of trusts if required. This offers peace of mind in case your circumstances change, so the life tenant’s entitlement may be reduced if they remarry or get a new civil partner. You can give your trustees discretion over this.  

  • You can be completely sure who will receive the value of your assets/property upon your death, whether this is your children or surviving spouse 

You can ensure that your spouse is provided for upon your death whilst protecting capital for other family members in the future 

A Few Disadvantages worth bearing in mind: 

There are also potential disadvantages – depending on your personal situation. These include: 

  • Full understanding and careful consideration of trustees is important. Your property will be legally owned by them 

  • A thorough review of the tax implications of setting up the trust. You have to consider the impact of the nil rate band and who will face tax consequences. Some trusts will not provide significant tax relief until the death of the trustees and there may be several different types of tax liabilities applicable, including income tax and Capital Gains Tax. 

  • If you divorce or remarry or your circumstances change the terms of the trust may be affected. 

  • You cannot create up the trust purely for the purposes of reducing care fees. 


For initial advice about Estate Planning including Lasting Powers of Attorney, Wills, Trusts and Probate; call our team on 0203 488 7503, 01992 236 110 or contact us by email at or via our website


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