By establishing a life interest trust in this way, the surviving spouse can be provided for during their lifetime; on their death, the estate (including the property) passes automatically to the testator’s children or other beneficiaries as specified in the will.
This effectively safeguards capital for the benefit of the testator’s children. It is a particularly useful instrument if the testator’s children are from a previous relationship as it circumvents the surviving spouse inheriting everything outright and then creating or changing their will to leave assets beyond the reach of the first set of children.
How to make provision for spendthrift children
It is fair to say that most individuals seeking to create a will would not leave the bulk of their estate to a chosen beneficiary if they knew that person would then squander their inheritance on a series of unwise or transient purchases.
It is, however, an unfortunate reality that some people (youth tending to be the major factor here) simply do not have the capability of looking after their own finances properly.
While it may be difficult to anticipate how an inheritance might be used, and since the proverbial crystal ball proves elusive to most, a good way to mitigate concerns about injudicious children spending their inheritance at too young an age or without any financial nous is for the testator to create a trust in their will.
This passes legal ownership of whatever the trust comprises (cash, property or investments) to a set of trustees to be looked after for the beneficiaries’ benefit.
Trusts can take many forms and set out a variety of terms and conditions. Crucially, they can stipulate that beneficiaries are not to receive income and/or capital until they reach a certain age.
Typically this is 18, 21 or 25, but age is ultimately down to the settlor and can be higher - such as 30 years old, bearing in mind their chosen beneficiary.
This means that the trustees (often a dependable and trustworthy family member or friend) remain the legal owners of the settlor’s hard-earned capital, and the risk of money being frittered away is reduced drastically.
Further examples often seen in practice with will trusts is the settlor-parents specify a certain portion of the fund is to remain in trust until it is to be used solely for the purchase of property, or so their children can attend higher education. There are many options to ensure financial astuteness prevails.
