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A life interest trust is one of the most common trust structures found in UK wills, particularly in second marriages or where a testator wants to provide for a surviving spouse whilst ultimately preserving the estate for their children. Understanding what a life interest trust means for you as executor — and where your duties end and the trustees' duties begin — is essential to administering the estate correctly. For a broader overview of your role, see our guide on executor first steps and our complete UK probate guide.
A life interest trust (also called an "interest in possession" trust) splits beneficial ownership of an asset between two groups of people across time:
The trust is created by the will itself. From the moment the testator dies, the trust comes into existence and the trustees hold the assets for the benefit of the life tenant and remaindermen in accordance with the trust's terms.
The classic life interest trust in a UK will works like this:
Example
Alan dies leaving a will that says: "I give my share of the matrimonial home to my trustees to hold on trust, giving my wife Barbara the right to live there for the rest of her life, and on her death to pass to my children equally."
Barbara is the life tenant. She can live in the property rent-free. Unless the will says otherwise, the outgoings of an income nature — council tax, utilities, routine repairs and often the insurance premium — fall on her, while capital expenditure falls on the trust fund. Alan's children are the remaindermen — they inherit Alan's share when Barbara dies.
This arrangement is popular because it achieves two goals simultaneously: the surviving spouse is protected and has a home for life; the testator's children from a previous relationship (or any relationship) are guaranteed to inherit eventually.
Life interest trusts can also apply to investment portfolios, savings accounts, or the residuary estate — not just property. They are particularly common where the testator wants a second spouse to benefit during their lifetime whilst ensuring the capital ultimately passes to children from a first marriage.
Your first job is to read the will carefully and identify precisely which assets are subject to the life interest trust. The will may specify:
Assets that are not covered by the life interest trust pass directly to the named beneficiaries or fall into residue in the normal way. It is possible — and common — for a will to contain both a life interest trust and outright gifts. See our guide on what the residuary estate means if the trust is over the residue.
You should also check whether the will contains any codicils that amend the trust provisions.
This is one of the most frequently misunderstood aspects of life interest trusts. Your duties as executor and as trustee are distinct, even if the same people hold both roles.
| Executor role | Trustee role |
|---|---|
| Winds up the deceased's estate | Manages the trust indefinitely |
| Pays debts, taxes, and legacies | Collects income and pays it to the life tenant |
| Obtains the Grant of Probate and collects assets | Invests and manages the trust capital prudently |
| Transfers trust assets to the trustees to hold | Maintains trust accounts and files trust tax returns |
| Finishes when the estate is fully administered | Continues until the life tenant dies (or trust ends) |
In practice, the will often names the same people as both executors and trustees. Once you have administered the estate and transferred the trust assets across, your executor duties cease and your trustee duties begin. For a full breakdown of your ongoing executor responsibilities, see our guide to executor personal liability in the UK.
You cannot formally transfer assets to the trust until you hold the Grant of Probate. Apply using form PA1P, value the estate (including the trust assets), and complete the relevant IHT return. See our detailed PA1P guide and our IHT400 guide.
If the life interest trust includes a residential property, you must update the Land Registry title to reflect the trust. This involves:
For valuation matters, refer to our guide on valuing property for probate.
Investment portfolios, stocks, and shares held in the deceased's sole name must be transferred to a trustee account. Contact the relevant investment platform or stockbroker and provide the Grant of Probate. A new account will usually be opened in the trustees' names "as trustees of the [name] Will Trust".
Trustees need a separate bank account to receive and pay out trust income. This should be clearly labelled as a trustee account. Do not mix trust funds with your own personal money or the general estate administration account.
The will itself creates the trust and sets out its terms. However, it is sometimes helpful for the trustees to sign a separate declaration of trust confirming they hold the assets on the trusts set out in the will. A solicitor can prepare this document. It provides a clear record for the life tenant, remaindermen, and any future professional advisers.
The IHT position depends on who the life tenant is and the nature of the trust assets.
Where the life tenant is the deceased's spouse or civil partner and the interest is an immediate post-death interest, the assets passing into the life interest trust are treated as passing to the spouse and are exempt from IHT at the first death. The exemption is unlimited unless the surviving spouse is not a long-term UK resident, in which case it is capped at the level of the nil-rate band, £325,000 (the domicile test that used to govern this was replaced by a long-term UK residence test on 6 April 2025).
The RNRB (£175,000 per person) is available where a "qualifying residential interest" is closely inherited — that is, inherited by direct descendants. This is the point most often stated the wrong way round.
At the first death, a life interest for the surviving spouse does not attract the RNRB. GOV.UK puts it plainly: where a home is held in trust when a person dies, it "will only qualify for the residence nil rate band if it becomes part of the direct descendant's estate after the person dies". A life tenant spouse does not inherit the home; they get the right to occupy it. The first estate is spouse-exempt in any event, so its RNRB is simply not used — and an unused RNRB is transferable, as a percentage, to the survivor's estate.
At the second death the position changes. The trust property is aggregated with the life tenant's estate because they held a qualifying interest in possession, and it then passes to the remaindermen. If those remaindermen are direct descendants of the life tenant — which includes step-children, so the first spouse's children from an earlier relationship usually count — the property is closely inherited and the RNRB is available in the survivor's estate, together with the percentage transferred from the first.
The other conditions still have to be met: the property must have been the deceased's residence at some point, the interest must be an immediate post-death interest, and the RNRB tapers away by £1 for every £2 of net estate above £2m. Where everything lines up, a couple can shelter up to £1 million between them — two nil-rate bands of £325,000 and two RNRBs of £175,000. See our IHT400 guide for how to claim the RNRB correctly.
If the life tenant is someone other than the deceased's spouse or civil partner (for example, a parent creating a life interest in favour of a sibling), the spousal exemption does not apply. The value of the trust assets forms part of the taxable estate and IHT may be due at the first death in the usual way.
When the life tenant dies, the trust assets pass to the remaindermen. This is a taxable event for IHT purposes. The trust assets are treated as part of the life tenant's estate for IHT (as they had an interest in possession). The trustees must:
At this point the surviving spouse's own nil-rate band and RNRB will be available, plus any unused portions transferred from the first spouse's estate. This can significantly reduce or eliminate the IHT liability. See our guide on what to do after the Grant of Probate.
Once the trust is constituted, the trustees have continuing obligations:
The interests of the life tenant and the remaindermen can sometimes conflict. Common sources of dispute include:
Trustees must act impartially between the life tenant and the remaindermen — that duty is what most of these disputes turn on. Where the trust terms are unclear, the trustees can apply to the court for directions on how to construe them. See our guide on contentious probate for related disputes.
Trusteeship carries personal liability, and the questions below are the ones that most often turn out to need someone acting on the trustees' instructions rather than general guidance:
For a broader view of your responsibilities and exposure, see our guide to executor personal liability and the full executor timeline.
The life tenant does not own the property, so they cannot sell it. The power of sale belongs to the trustees, who must consult the life tenant as a beneficiary in possession before exercising it. Whatever the route, the proceeds of sale are then held on the same trusts — the life tenant is entitled to the income generated by the proceeds, or to live in a replacement property if the trust terms allow, and the capital passes to the remaindermen when the life tenant dies.
The default position is that the life interest continues regardless of remarriage unless the will expressly provides otherwise. Some wills include a clause terminating the life interest on remarriage. Check the will carefully. If the life interest continues and the trust property is a residential property, the IHT implications on the life tenant's death will need careful analysis.
Usually, but not immediately. GOV.UK excludes "a will trust — set up on death that takes assets from the estate and is closed within 2 years of death" from registration. A life interest trust for a surviving spouse will almost always run past that point, and at that stage it has to be registered on HMRC's Trust Registration Service. A trust that becomes liable to UK tax has to register regardless, within 90 days of becoming liable. GOV.UK states that failure to register can attract a £5,000 penalty.
No. A floating trust (also associated with mutual wills) is a different concept — it applies where two testators agree not to change their wills after the first death. A life interest trust is a straightforward interest in possession created in a single will. The two concepts are entirely distinct.
Yes, in many cases. If the life tenant and all the remaindermen agree (and are all adults with legal capacity), they can enter into a deed of variation within two years of the death to redirect the assets outright to the remaindermen, effectively collapsing the trust. Everyone whose entitlement is reduced has to agree; where a remainderman is a minor or not yet born, the court's approval is needed. Whether it saves tax depends on the facts — collapsing a spouse-exempt life interest brings the value into charge at the first death, which can cost more than it saves.
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