Flexible Life Interest Trust

     A Flexible Life Interest Trust could be used in a Will by a parent who wishes their spouse to benefit but also wishes to have assets protected for their children. 

    The Trust (also known as a FLIT) is essentially a mixture of a discretionary trust and a life interest trust. It will name a life tenant, who is usually the testator's surviving spouse, and will also name other discretionary beneficiaries. 

    Whilst the surviving spouse is alive, they are entitled to all the income generated by the trust. The surviving spouse may also benefit as a result of the trustee's discretionary power to advance capital.

    The assets held by the trust will be protected from third party claims such as would arise if the surviving spouse became bankrupt or remarried.

   A FLIT offers flexibility as to how the trustees will benefit each of the beneficiaries of the trust. The testator may, for example, have included in a Letter of Wishes that the trustees make small gifts of capital to the life tenant or loan them a large amount of capital that would be repayable to the trust on their decease.

   When the life interest ends, the trust will continue as a discretionary trust for the other discretionary beneficiaries. They inherit at the discretion of the trustees. In that way they are protected from third party claims.

   A deceased spouse's Will could include a life interest trust (known as a Protective Property Trust) over their share of the residential property and a Flexible Life Interest Trust over the rest of their estate.

  For information about having a Will prepared, tailored to your particular circumstances, please contact us.