A Flexible Life Interest Trust (FLIT) in your Will offers greater peace of mind if you wish to protect the value of your estate for future generations. It is often described as the ideal modern Will Trust, as it allows for adequate provision for the surviving spouse/partner, whilst incorporating flexibility into the Will whereby other family members/beneficiaries may benefit should the survivor not require the provision after the first death.
This Trust is created on the death of the first spouse/partner and the assets of the deceased are held in a trust which pays any income generated to the survivor for their lifetime. On the death of the survivor, the trust capital is passed to nominated beneficiaries, such as children. Because the capital in the trust is not owned by the surviving spouse/partner, it cannot be given away by them to, say, a new spouse or partner, and it cannot be assessed if the survivor needs long term care.
The Trust
- Includes powers for the trustees to lend trust capital to the survivor. So if they need capital, the trustees can lend it to them – with the capital being repaid either when the survivor dies or if they go into care.
- Includes powers for the trustees to give capital to the survivor. It is unlikely that this power would be used because the survivor could then give this to a new spouse or partner and it would be assessed if they went into care. However, as a flexible trust, it enables the trust to be wound up and the whole estate given outright to the surviving spouse/partner if appropriate.
- Includes powers to pay capital to the nominated beneficiaries (children, for example) so that if children need capital and the surviving spouse/partner does not (for example, if the survivor is in a care home and the children are in need of capital to reduce their mortgages), capital in the trust could be paid to them.
Key benefits
- Guarantees who will benefit from your estate if your surviving spouse/partner either remarries, enters into a new relationship or writes a new Will after your death.
- Allows a nominated person to benefit from the income generated from your estate when you are gone, whilst protecting the capital value for future generations.
- Reduce the potential impact of residential care fees on the value of your estate should your surviving partner go into care.