When it comes to planning for the future, one of the most important things to safeguard is your home. With a liferent trust, you can protect your home, your family and your assets for the future. Read on for more information on how a liferent can protect your home.
If you’re concerned about inheritance within your family and care costs later in life, a liferent trust can be a solution. Many of our clients are discovering how a liferent can protect their home.
Modern society is increasingly characterised by blended families – where individuals come together from previous relationships to form new family units. These families may include children from prior marriages, step-siblings, and sometimes new children born into the new relationship.
Blended families can bring a rich dynamic of love and support, but they also come with unique challenges. Navigating inheritance is one such challenge.
Another challenge for us all is that, as people live longer, the need for long-term care is increasing – which in turn makes care more expensive. Families often worry about how to afford good quality care without exhausting all their savings and forcing the sale of the family home. Planning ahead for care costs has become very important for individuals and families alike.
What is a liferent?
A liferent is most commonly used in relation to your bricks and mortar property – your home, and any other properties that you own.
In basic terms, a liferent allows one party (simply known as the “liferenter”) to use or live in the property for the duration of their life without directly owning it. Once they pass away, full ownership of the property is passed to the second party, known as the “fiar”.
Liferents are most commonly created within your Will, so now is the best time to review your existing Will to ensure it’s fit-for-purpose. If it doesn’t contain liferent clauses, contact us today for a free chat. If you’ve never made a Will, now is the time to get that sorted.
Here are some examples which demonstrate how a liferent trust can work for your family:
Protecting a Spouse While Securing Children’s Inheritance
Consider a scenario where Homer is married to Marge but has children from a previous marriage.
Homer wants to ensure that Marge is cared for after his death while also preserving an inheritance for his children.
One effective method is to leave the family home to Marge in liferent, with Homer’s children as the eventual beneficiaries.
In this arrangement, Marge has the right to live in and use the property during her lifetime, but she does not own it outright. The home passes to the children after Marge’s death.
This ensures that Marge is secure, while the children will inherit the house in due course.
Further flexibility can be added and liferent arrangements can be tailored to suit your needs.
Safeguarding Against Care Home Fees
Another common scenario involves couples who jointly own their home and are concerned about potential care home fees diminishing their children’s inheritance.
Let’s say Victoria and David jointly own a house and are worried that if one or both require residential care, the home might need to be sold to cover fees.
A popular strategy is for each spouse to leave their half of the house in liferent to the surviving spouse, rather than transferring full ownership.
This means that when Victoria dies, David has the right to live in the house, but does not own Victoria’s half.
If David later requires care, only David’s half share of the house is assessed for care fees.
Flexibility of a liferent
With a liferent trust, trustees have the power to sell the property, allowing them to manage the estate in the best interests of everyone.
For example, if the surviving spouse wants to downsize or move to sheltered accommodation, the trustees can sell the home, reinvest the house sale proceeds, and even purchase a more suitable property. The liferenter would continue to receive the benefit/income from the trust, while the capital remains preserved for the beneficiary.
The flexibility of a liferent trust can be seen through the many specifications which can be made to suit your wishes. Despite the name, a liferent does not always have to be set in place for until it’s beneficiary passes away. This timeframe can be set by you upon creation of the trust and the liferenter can give-up their right at any time. Plus, there is the added safety net that, if the liferenter loses the capacity to renounce their right, the fiar or trustee may do this for them.
Is a liferent Right for You?
Liferents offer a flexible and efficient way to protecting one loved one while securing an inheritance for another. They are also a valuable tool in planning for care costs. If you’re considering how best to manage your estate.
You may already have written your Will, however we encourage you to consider updating it to include a liferent if you are concerned about protecting your home.
Get the right legal advice now
If you would like more information or get more information on how a liferent can protect your home, contact us today for a free chat on 0141 628 5544, email info@weirlaw.co.uk or Make An Online Enquiry
