A Liferent trust is often included within a Will to ensure that a particular asset from a person’s estate passes to someone, but only after another person has died and has had use of that asset during their lifetime. In other words, it is a means of retaining control over the ultimate destination of an asset, or of a share in an asset, by Will.
For example, a widow or divorcee with children by a former marriage or relationship may wish for her current spouse or partner to have the right to occupy her house – and possibly receive income generated by their savings – for life, and then, following the death of her current spouse or partner, for those assets to pass to her own children. In contrast, if that widow had left the assets unconditionally to her new spouse or partner under her Will, she would not be able to prevent them from completely changing their Will after her death, with the possibility that her children by the previous marriage may receive nothing from her estate.
Incorporating a liferent trust within a Will may sometimes have Inheritance Tax and Capital Gains Tax consequences, and may involve amending the title deeds relating to joint assets that are to pass under the Will. We can advise you on all of these matters.
Where a liferent trust is included within a Will it is desirable to name at least two executors, one of whom should ideally be someone who has no direct interest in the trust. This may be important to ensure that the terms of the trust are observed. After the testator (the person making a Will) dies, legal title to the liferented asset usually has to be transferred into the names of the trustees (who are often the executors) who will then transfer it to the ultimate beneficiaries when the trust ends.
This Briefing has been produced for information purposes only and is based on the law and other information available at the time of writing. We cannot be held responsible for any losses incurred through acting or failing to act on the basis of anything contained in this Briefing.
If you require advice on any of the matters referred to, please contact us so that we can advise you, taking account of your own particular circumstances and requirements.