Guide to Flexible Family Trust Will

Why make a Flexible Family Trust Will?

Many people assume quite wrongly that all their property and money will automatically pass to their loved ones when they die. But the truth is your money could be at risk, and end up somewhere you hadn’t intended.

Most Wills are written with your partner and your children as the intended beneficiaries, and that’s all well and good. But what happens if you die leaving all your money to your partner and then they remarry? What happens if you need long-term care and the local authority wants to possess your home to pay for care fees?

If you make a Flexible Family Trust Will before you die, you can protect your assets from these threats and many more.

What is a Flexible Family Trust Will?

Generically, it is what is called a Flexible Life Interest Trust Will. The Will creates a Flexible Life Interest Trust, also known as a FLIT, which deals with all the assets in the testator’s sole name and gives a life interest in the assets to the surviving spouse or civil partner.

How does a Flexible Family Trust Will differ from a standard Will?

A standard Will often leaves everything to the surviving spouse. A FLIT gives the surviving spouse a life interest in the testator’s assets – typically, in half the family home and any of the assets in the testator’s sole name.

What is the primary purpose of setting up a Flexible Family Trust Will?

It’s to protect assets so they can be used by the bloodline. The Trust can last for 125 years. After the children have passed away, the assets can remain in the Trust for the next generation, and this also saves on inheritance tax.

What are the key components of a Flexible Family Trust Will?

Much like a standard Will, you will name executors and Trustees. You can name gifts that are not subject to the Trust – you can give any amount of money or items outside of the Trust.

The residue falls into this Flexible Life Interest Trust, which we call a Flexible Family Trust. At the end of the Will, you can also include your funeral wishes.

What is the role of the testator?

The testator is the person writing the Will and wanting to deal with their assets. The Will expresses their wishes to the executors and Trustees, who have certain legal obligations to follow those wishes.

What is the role of the Trustee and the beneficiary in this type of Trust?

The role is to follow the testator’s wishes and administer the Trust created by the Will.

The Trust does not exist until the testator dies.

The beneficiaries can then choose to receive their inheritance as a loan from the Trust, while still protecting this inheritance from being lost on divorce or bankruptcy.

How does the flexible element work in practice?

It will depend on the wording in the Will around the Trust. It does vary.

What happens to assets when the testator dies?

The gifts should be transferred to the named beneficiaries outside of the Trust. Normally that will include one half of the family home – and assuming the surviving spouse is still living in the family home, the Trust gives them a life interest to stay there. Or, they can sell it and use that money to buy another property.  

Usually, the rest of the assets are given to the surviving spouse as a loan from the Trust. Somebody might have ISAs and savings in a bank account in their sole name. They pass away, and all that money can then be transferred to the spouse.

The spouse then writes a letter saying they have received these as a loan from the Trust created in their deceased husband’s or wife’s Will. That way, it’s protected from being lost on remarriage or to pay for care fees.

What are the legal requirements for creating a valid Flexible Family Trust Will?

Once it’s been drawn up, the Will must be signed and witnessed correctly.

Who should you consult to draft a Flexible Family Trust Will?

A solicitor may have experience in drafting these sorts of Wills, but will charge by the hour, which is generally more expensive than using a Will writer.

You may want to go to a solicitor if you want to add unusual clauses into your Will, while a Will writing firm like ours will have templates that have been tried and tested. These are ideal for standard situations and special requests can usually be fitted in. You can make as many gifts and choose as many different beneficiaries as you like.

An individual Will writer may have the ability to draft unusual clauses for you, but they won’t have the same experience as a solicitor – and you need to be confident that everything they draft will stand up at the end of the day.

What information and documentation are needed to set up the Trust?

Usually you need to apply for a grant of probate when the first person dies. You cannot deal with the family home or investment properties without that, and the Land Registry will insist on this.

Apart from that, you will need a Schedule of Assets and a Deed to establish any loan agreement, as discussed before. The Trust must be registered at HMRC within two years of the date of death.

Key Takeaways:

• A Flexible Family Trust Will is designed to protect your assets from being lost to long-term care fees or from passing out of your bloodline, such as through the remarriage of a surviving partner.
• The Will creates a Flexible Life Interest Trust (FLIT) that gives the surviving spouse a ‘life interest’ in the testator’s sole assets – often one half of the family home – as opposed to a standard Will that leaves everything to them outright.
• The Trust’s primary purpose is to safeguard assets for the bloodline, allowing the Trust to potentially last for up to 125 years and resulting in savings on inheritance tax.
• Other assets in the testator’s sole name, such as savings or ISAs, are typically transferred to the surviving spouse as a loan from the Trust, which acts to protect the funds from being seized for care fees or lost in the event of remarriage.
• While a solicitor may be better suited for drafting Wills with unusual clauses, Will writing firms generally use tried-and-tested templates and are a more cost-effective option for standard situations.