The Smart Estate Planning Move Most Families Don’t Know They Need
- Partner Content
- 1 day ago
- 2 min read
By Anelia Black and Karen Philips
Families come in every shape – blended, stepchildren, coparents and unmarried couples who live together. Despite family complexities, many people don’t have a Will.
Almost everyone knows what they want to happen when they die, they just haven’t written it down.
If there is no Will, Scots law decides what happens and doesn’t always recognise modern families or reflect people’s wishes. For blended families and tricky relationship dynamics, sometimes a simple Will isn’t enough.
That’s where a liferent trust comes in.
A liferent lets someone use an asset for life, while someone else gets it later. It’s useful for:
Blended families
Couples who want to protect each other
Parents who want fairness and control
Care fees assessments
Anyone concerned that relatives may not “do the right thing”.
Case Study
John and Liz are married. John has two children from a previous relationship and Liz has three of her own. The family home is in John’s name. John wants Liz to stay there rent-free until her death, but the house (or the underlying capital value) should eventually go to his children.
The solution was to include a liferent trust in his Will.
However, when John died, Liz decided to sell the house (with the trustees’ agreement), bought something smaller and the proceeds were reinvested by the trustees.
Liz had the flexibility to buy a new home. She can enjoy the income from the investments held in trust of the remaining proceeds of sale. When she dies, the capital passes to John’s children, exactly as intended.
Why Liferents Are Becoming a GoTo Strategy
They Offer Protection in Blended Families
Without a liferent, children could force a property sale. Assets become their property (and exposed to divorce or bankruptcy). They may die and the asset forms part of their estate. With a liferent, your partner gets the right to stay in the home and your beneficiaries ultimately inherit the property. Your wishes can’t be rewritten.
They Help Manage Tax More Efficiently
Children may face Capital Gains Tax when a property is sold. A liferent trust can provide a more neutral tax position.
They Can Help Protect Against CareHome Fee Assessments
A liferent can help ensure the value of the asset(s) doesn’t automatically pass into your partner’s estate, where it might be considered when assessing ability to pay for care.
A liferent trust can hold as much or as little of your estate as you want. Your trustees manage it after your death. It’s flexible, protective and you to keep control.
A liferent is peace of mind. It lets you look after the people you love now, protect the people you love later and keep your estate on your terms.
It might be the smartest planning tool you’ve never heard of.
If you think a liferent trust would help your family in the future, please get in touch at karen.phillips@blackadders.co.uk
