Published on: 24th June 2024

How a Life Interest in Property Trust (LIPT) can help you safeguard your inheritance

Many people want to ensure their home stays protected for their spouse while eventually passing it on to their children. However, a standard Will might not achieve this. A standard Will cannot guarantee this happening as if your spouse were to remarry, it may be gifted to the new partner, not your children. One solution for this scenario could be implementing Life Interest in Property Trusts (LIPTs) within your Wills.

The Challenge with Standard Wills:

When property is left entirely to a spouse in a Will, it becomes their sole possession upon your passing. This creates two potential problems:

• Care Fees: Local authorities might consider the entire property value when assessing care home fees for the surviving spouse if they were put into care.
  
  
• Sideways Disinheritance: If the surviving spouse remarries, their new spouse might inherit the property, leaving your children with nothing.

How LIPTs Offer a Solution:

LIPTs work within your Will to address these concerns. Here's how:

• Shared Ownership: To use LIPTs effectively, you need to own the property as Tenants in Common (each owning a defined share). LIPTs can be created for your designated share (typically 50% but can be an alternative value).
  
  
• Protection for Your Spouse: The surviving spouse retains the absolute right to live in the property for life.
  
  
• Safeguarding Your Children's Inheritance: Upon the surviving spouse's passing, your designated share (protected by the LIPT) goes directly to your chosen beneficiaries (usually your children).

LIPTs offer a valuable solution for those who want to protect their home for their spouse while guaranteeing their children's inheritance.

If you would like to speak with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here.

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