Life Interest and Right of Occupation Trusts are two common Trusts created by a Will, typically used by couples wanting to protect their respective share of their property.
What is a Life Interest Trust?
A Life Interest Trust provides the beneficiary (the life tenant) with the right to benefit from the property during their lifetime. The Trust ends on the death of the life tenant. For the life tenants lifetime they can:-
- Live in the property
- Sell the property and downsize
- Enjoy the interest on any capital in the event of a sale
- Enjoy any generated income.
Read more about Life Interest Trusts here.
What is a Right of Occupation?
A Right of Occupation gives the beneficiary the right to live in the property and enjoy the contents, rent free whilst certain requirements apply. Whilst this type of Trust can last for the occupier’s lifetime, they often place conditions on the occupancy and state specific events that will bring it to an end. These can include, but are not limited to:-
- If the occupier remarries
- If the occupier cohabits
- If the occupier would like to move or downsize
- If the occupier moves into a care home.
Key differences
A Life Interest Trust provides the beneficiary with the reassurance that the Trust is in place for their lifetime, allowing them the flexibility to move or downsize should they need/want to. They are also given the right to benefit from any property-related income.
Alternatively, a Right of Occupation Trust means the occupant is only entitled to occupy the property. They are therefore not entitled to any generated income and the lifetime protection is not there.
Should you wish to prepare a Will and include a Life Interest Trust or Right of Occupation Trust, please call our expert solicitors at Johnson Astills who would be pleased to assist you with this. You can call us at our office in Leicester or our office in Loughborough. Alternatively, you may prefer to email us at legal@johnsonastills.com or fill in our enquiry form.
