Q&As

In what circumstances in a life interest trust is it possible to appoint capital to the life tenant? This is asked in the context of a trust where the life tenant and the remaindermen are all in agreement to capital being appointed to the life tenant and wish the trust to continue.

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Produced in partnership with Lynne Counsell of Addington Chambers
Published on: 25 June 2020
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We have assumed that: This response does not consider the tax implications of an appointment of trust capital to a life tenant.

Life interest trusts

A life interest trust is a trust whereby the life tenant has either the right to use an asset, such as a residence, or the right to income from the asset. A life interest trust can be terminable, particularly in relation to the occupation of property, on a specific event such as remarriage or cohabitation, as well as death.

A life interest trust is also known as an interest in possession trust. Such trusts have various advantages:

  1. •

    the preservation of assets for family members

  2. •

    the property in question will not form part of the settlor’s assets in any financial

Lynne Counsell
Lynne Counsell

Barrister, Addington Chambers

Lynne has been in traditional Chancery practice for some thirty years, specialising in probate matters, construction of wills and trusts and also financial services and drafting.

Lynne was for some years counsel for Tower Hamlets, representing them on landlord and tenant cases and counsel for Bedford Building Society representing it on mortgage cases.

Lynne has written or updated over fifty books, including writing the initial volume of Atkin’s Court Forms “Financial Services” and updating Halsbury’s Laws on Injunctions. Lynne was also co-author of two editions of “Insider Trading” and co-editor and one of the writers of “Chancery Practice and Procedure.”

Articles include “Marketing of Investments” for the Law Society Gazette and “The Doctrine of Mutual Wills” for the Trust Quarterly Review. Lynne won one of the few cases on mutual wills in the last fifty years – Charles v Fraser (2010).

Lynne has drafted the standard unit trust for the government of Nigeria, the rules and related documentation for various building societies and clubs, shareholder agreements, company takeovers compliance documentation for certain banks as well as wills and trusts.

Lynne was awarded the 2017 Corporate international Magazine Global Award – “Investment Contracts Barrister of the Year in England”.

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Life interest definition
What does Life interest mean?

An entitlement to trust income or to the use of trust assets, but not the capital. Also called an possession'>interest in possession.

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