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Life Tenant

Also known as: Life Interest Holder, Life Beneficiary

Definition

A life tenant is a person who has the right to live in a property or receive income from trust assets for their lifetime, while the capital is preserved for other beneficiaries who inherit after their death.

Life tenancies are most commonly used in second marriages to provide housing security for a surviving spouse while protecting children's inheritance.

What Does Life Tenant Mean?

Under the Settled Land Act 1925, a life tenant is a beneficiary of a Life Interest Trust who has the right to occupy trust property or receive trust income for their lifetime. The capital is preserved for remaindermen—the beneficiaries who inherit when the life tenant dies. According to HMRC, "a life tenant is entitled to the income of a fund, but not capital." This is a trust "for interests in succession."

As life tenant, you can live rent-free for life and cannot be evicted. You can redecorate and take in lodgers. However, you must maintain the property, pay insurance, council tax, and utilities. Crucially, you cannot sell or mortgage the property without trustees' and remaindermen's consent, and you cannot leave it in your will.

Sarah, 65, became life tenant of a £340,000 home after her husband David's death. David's children from his first marriage are remaindermen. Sarah lives there for life, maintaining it and paying bills. When she dies, the house passes to David's children. She can't sell it to downsize without everyone's agreement.

Life tenancies commonly address competing needs in second marriages—providing security for a surviving spouse while protecting children's inheritance. The life tenant's interest isn't counted for care home fee assessments because they don't own the capital. However, this only applies to Life Interest Trusts created through a will. Lifetime property trusts created before death can be challenged under Deprivation of Assets rules.

Common Questions

"Can a life tenant sell the property they live in?" No, they don't own it—they only have the right to live in it. Any sale requires agreement from trustees and remaindermen (who will inherit the capital).

"What happens to the property when a life tenant dies?" Their right to occupy ends immediately. The capital passes to the remaindermen. The life tenant cannot leave the property in their will because they never owned the capital.

"Is a life tenant's interest counted for care home fees?" No, it's generally not counted because the life tenant doesn't own the capital. However, this only applies to trusts created through a will, not lifetime property trusts, which can be challenged under Deprivation of Assets rules.

Common Misconceptions

Myth: A life tenant owns the property they live in

Reality: A life tenant does not own the property. They only have the right to live in it for their lifetime. The legal title is held by trustees, and the capital belongs to remaindermen. The life tenant cannot sell, mortgage, or leave it in their will. The confusion arises because life tenants have many practical rights of homeowners—they can live there indefinitely and cannot be evicted.

Myth: Putting your home in a lifetime property trust always protects it from care fees

Reality: Life Interest Trusts created through a will generally protect capital from care fee assessments. However, lifetime property trusts created before death can be challenged under Deprivation of Assets rules. Local authorities can investigate indefinitely. The crucial distinction is when the trust is created: through your will (generally safe) versus during your lifetime (potentially challengeable).

  • Life Interest Trust: The legal structure that creates the life tenant's position and defines their rights.
  • Remainderman: The person who inherits the capital when the life tenant dies.
  • Trust: Life tenant is a specific beneficiary role within trust structures.
  • Property Protection Trust: Often uses life tenancies to protect the family home.
  • Blended Families: The most common scenario requiring life tenant arrangements.

Need Help with Your Will?

Understanding life tenancies is crucial if you're in a second marriage or have a blended family. A Life Interest Trust with properly defined life tenant rights can provide security for your spouse while protecting your children's inheritance.

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Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.