Life Interest Trust Will Template (IPDI)

A life interest trust will is an ordinary will that creates a trust over a chosen asset — most often your share of the family home — on your death. It is also called an interest in possession trust, a property protection trust, or a right of occupation will. Because the trust starts immediately on death and the survivor has a present right to benefit, it is an immediate post-death interest (IPDI) for tax purposes.

How it is structured:

• The life tenant — your spouse or partner has the right to live in the property and/or receive income from the trust for the rest of their life.
• The remaindermen (final beneficiaries) — when the life tenant dies, the capital passes to the people you named, usually your children.
• The trustees — they hold and manage the trust, with power to advance capital, substitute or downsize the property, and end the trust early where appropriate.

The key feature is control: the survivor is provided for, but cannot redirect your share of the capital away from your chosen beneficiaries.

Our template is based on UK law and structured following the Wills Act 1837 and the IPDI rules under the Inheritance Tax Act 1984.

The risks of leaving everything outright:

• Sideways disinheritance: if you leave your share to your partner absolutely, they can later leave it to anyone — a new spouse, their own children, or someone outside the family — and your children may receive nothing.
• Remarriage: marriage usually revokes an existing will, so a surviving partner who remarries could die intestate, with the estate passing under intestacy rules rather than to your children.
• Loss of the capital: the survivor is free to spend or gift the capital during their lifetime, reducing what eventually reaches your beneficiaries.
• Blended family tension: children from a first relationship and a current partner can have competing interests, leading to disputes.

How a life interest trust helps:

• Your partner is secure — they keep the right to live in the home for life.
• Your share of the capital is preserved for your chosen final beneficiaries.
• The survivor cannot redirect that capital, so your wishes are protected.

This is why life interest trust wills are widely chosen by couples in second marriages, blended families, and anyone who wants to provide for a partner without giving up control of where their own share ultimately goes.

The one essential condition — tenants in common:

A life interest trust can only take effect if your share of the property passes under your will. If you own your home as joint tenants, the whole property passes automatically to the survivor by survivorship and never reaches the trust. The property must be held as tenants in common. If it is currently joint tenants, you sever the joint tenancy first — our Notice of Severance of Joint Tenancy handles this.

What each role does:

• Life tenant: the right to occupy the property and/or receive trust income for life. They are usually responsible for outgoings such as insurance and repairs.
• Trustees: typically given power to allow occupation, to sell and substitute or downsize the property if the life tenant moves, to invest, and in some cases to advance capital to the life tenant or bring the trust to an end early.
• Remaindermen: the final beneficiaries who receive the capital after the life tenant dies, in the shares you set out (with substitution for their own children if one dies before the life tenant).

Our template includes a comprehensive set of trustee powers and a clear gift over to your final beneficiaries, so the trust can be administered sensibly as circumstances change.

How inheritance tax generally works with an IPDI:

• First death: where the life tenant is your spouse or civil partner, the spousal exemption usually means no inheritance tax on the assets passing into the trust.
• Second death: the trust assets are treated as part of the life tenant's estate and assessed for inheritance tax then — so tax is deferred, not avoided.
• Residence nil-rate band: because the home ultimately passes to direct descendants, the estate can still qualify for the residence nil-rate band, subject to the £2 million taper threshold.
• No periodic charges: unlike a discretionary trust, a qualifying IPDI does not attract the ten-year and exit charges that apply to relevant property trusts.

Common mistakes to avoid:

• Leaving the property as joint tenants — the trust receives nothing.
• Naming the life tenant or a final beneficiary as a witness — they lose their entitlement under the Wills Act 1837.
• Treating the trust as a guaranteed way to avoid care fees — deliberate deprivation rules can apply.
• Forgetting to register the trust with HMRC — a life interest will trust is exempt for the first two years after death, but must be registered on the Trust Registration Service if it continues beyond two years (or sooner if it has a UK tax liability).

Tax figures and thresholds change. Always check the current position on GOV.UK, and consider professional advice for high-value or complex estates.