My father died a few years ago and left everything to my mother. They both had wills written by a solicitor that left everything to each other, however, they created a Life Interest Trust over the house, with my sister and I named as trustees.
I’ve been told this means that I need to add mine and my sister’s names to the title deeds. What does this mean and how does it work?
Property inheritance: What are the duties of a trustee for a Life Interest Trust over a family home? (Stock image)
Lorraine Robinson, head of legal at will writing firm Farewill and a member of the Law Society’s wills and equity committee, replies: To put it simply, yes, you and your sister should be updating the title deeds to say that you’re trustees.
To understand why you should do this, you need to understand the life interest trust and what it does to the ownership of your parents’ property.
How do life interest trusts work?
Trusts are often included in wills to enable an element of protection of the asset held in trust, for example for a future generation. A life interest trust is a fairly common example of such a trust.
A trust in a will is an arrangement where assets are looked after by certain people (the trustees) for the benefit of others (the beneficiaries).
The trustees are the legal owners of the trust property, but are bound by law to make sure than the beneficiary or beneficiaries receive the benefit of the property.
It’s difficult to advise specifically without seeing your father’s will, but a typical life interest trust carves the property out of the rest of the estate, placing it into trust for a period of time, often the duration of someone’s life.
The terms of the trust will dictate who the beneficiaries are, and with a life interest trust the beneficiaries are split into two groups:
Lorraine Robinson: ‘A trust in a will is an arrangement where assets are looked after by certain people for the benefit of others’
1) The person (it’s usually just one person) who has the life interest – technically called the ‘life tenant’, and;
2) The eventual beneficiary or beneficiaries (it can be just one person but it’s often more) who will receive the property at the end of trust (usually the end of the life tenant’s life) – technically called the ‘remaindermen’.
In your scenario therefore, it’s not quite right to say that your father’s will left everything to your mother, as his share of the property has been carved out into a trust where your mother is a beneficiary of the property during her lifetime, but she is not the legal owner of it.
In your father’s will you will also find his directions on who the eventual beneficiaries are. It may be that in your case, you and your sister are both the trustees and the eventual beneficiaries.
What are the duties of trustees?
The trustees – you and your sister – have the legal ownership of your father’s share of the property and responsibilities to both groups of beneficiaries: managing the trust property so that the life tenant benefits during their lifetime but also ensuring the trust property is looked after for the eventual beneficiaries too.
The terms of the will often provide more detail on the powers that the trustees have to do this, and if they can exercise any discretion to favour one group of beneficiaries over the other.
You should get advice on the specific terms of your father’s will so as trustees you and your sister understand your obligations and responsibilities, and to whom.
Typically, a life tenant has certain rights by law, including: the right to occupy the property; to ask the trustees to sell the property and buy another with the proceeds; and to sell the property and receive any income generated from investing the proceeds.
Often the remaindermen have little or no knowledge of the trust until the life tenant dies, and that’s often fine, as their eventual interest should never override your mother’s rights during her lifetime.
Should trustees’ names go on the title deeds?
What you should do is ensure that your father’s share of the property is transferred into your and your sister’s names, as trustees.
It would be best to consult a solicitor for this. You will need to obtain a grant of probate to your father’s estate if you have not already, and ensure that the appropriate entries are made at Land Registry to make it clear that you own as trustees, rather than for yourselves, even if you are eventual beneficiaries.
Whilst sometimes people do nothing about life interest trusts that contain only property until it’s necessary to sell the property, or when the trust ends on the life tenant’s death, that isn’t really the best course of action.
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Not dealing with the administrative side of ensuring the legal ownership is up to date could cause delays and extra expense when you do want to sell or transfer the property in the future.
What type of legal ownership did your father have?
One last thing to raise though, is that this arrangement in your father’s will only works if your father’s share of the house was owned in such a way that it passed under his will.
If you own a property jointly with someone – your question doesn’t make it clear but I have assumed it was owned jointly by your parents – then there are two ways in which you can legally own it and the type of ownership determines if a co-owner’s share can pass under the will or not. These are as follows:
1) Joint tenants means the owners ‘jointly and severally’ own the whole property, and when one dies the other becomes the 100 per cent owner. Neither can leave the property to anyone else in their will.
2) Tenants in common means the owners have the option of leaving their share of a property to someone else besides each other.
You mention that a solicitor prepared your parents’ wills, and I would expect that they or any professional will writer would have made the correct enquiries and prepared the correct documents to ensure your father’s share passed under the will.
However, this is something you should check, and again obtaining specific advice would be prudent.
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