Life Interest

A life interest gives a person (the life tenant) the right to use an asset or receive its income for their lifetime, while the underlying asset ultimately passes to a different beneficiary — the remainderman — when the life tenant dies. It is a form of trust arrangement frequently used in Wills to balance competing needs, most commonly to let a surviving spouse stay in the family home while preserving the asset for children from an earlier relationship. The life tenant cannot sell or give away the asset outright, because they only hold a temporary, lifetime interest.

Life interests are a classic blended-family tool, but the responsibilities for rates, insurance, and upkeep should be spelled out to avoid disputes. Example: Robert's Will gives his second wife a life interest in their home, with the property passing to his children from his first marriage after she dies or moves into care. Note that granting a life interest can affect a survivor's pension and may still leave the estate open to a family provision claim.