Choosing Your Family Trust

Last verified: 14 November 2025 (England & Wales)

Modern families rarely fit into a neat, one-size-fits-all Will.
Second marriages, step-children, uneven finances and future “unknowns” can all affect how you want to protect your loved ones.

You may not even be sure yet whether you “need a trust”. You want your partner and children to be treated fairly, regardless of what happens next. Trusts are one of the tools that can help with that.

This guide looks at three main options we often discuss in meetings:

• Property Life Interest Trust (PLIT)
• Life Interest Trust (LIT)
• Flexible Life Interest Trust (FLIT)

Each of these has its own standalone article with more detail. This guide is here to show how they relate to each other and how we choose between them.

You are not expected to read this and pick a product. The aim is to help you understand the trade-offs so we can make a decision together.

You do not need to remember the labels. What matters is what you are trying to protect and how much flexibility you want for the survivor and the trustees. Our job is to record/explain the technical names.

Key terms in plain English

Before we look at the trusts, a few phrases come up again and again. These are what they mean in practice.

Your home – how it is owned• Beneficial joint tenants
You both own the whole property together. When one of you dies, the survivor automatically owns it all, whatever the Will says.

• Tenants in common (for example, 50–50)
You each own a defined share, often 50–50, although other splits are possible. Your Will controls what happens to your share, such as placing it into a trust to protect it for your chosen beneficiaries (for example, your children).

Where we are using a trust to protect a share of the home, we will usually change the ownership to tenants in common so each Will can do something different with its own share if needed.

Residue – what is left at the end“

Residue” is simply the name for what is left in your estate after:

• Any debts have been paid.
• Any taxes and funeral expenses have been dealt with.
• Any specific gifts (for example, “£5,000 to each grandchild” or “my ring to my daughter”) have been given.

What remains is the “residue”. A Life Interest Trust is just a trust that holds this “what’s left” pot. It can also include your share of the home if that suits your planning. It is not either “property or residue only” – we decide with you how best to combine them.

Access to capital

If the survivor has “access to capital”, it means the trustees can allow them to use some of the lump sum itself, not just the income it produces. For example, using part of the estate for home repairs, medical costs or helping children.

Nil-rate band and Residence Nil-Rate Band (RNRB)

• The nil-rate band is the standard tax-free allowance each person has for inheritance tax.
• The Residence Nil-Rate Band is an extra allowance that can apply when a main home passes to direct descendants.

These allowances are about how much of your estate can pass free of inheritance tax. We look at them for you and, where helpful, involve your other advisers.

We return briefly to RNRB later. For now, it is enough to know that some trust shapes work more easily with it than others.

Your two sliders: protection and flexibility

An easy way to think about trusts is to imagine two sliders:

• Protection – how strongly the structure can help defend assets from remarriage, “sideways disinheritance”, some creditors and other outside pressures.
• Flexibility – how much freedom trustees have to help different people at different times.

You only have so much “room” between the two. Pushing one slider further usually means easing the other back a little. This is an illustration only, not a scientific score.

Very broadly:

• A simple Right to Occupy sits towards the protection-heavy end. It focuses on the survivor’s right to live in the home, with limited flexibility beyond this.
• A Property Life Interest Trust and a Life Interest Trust sit somewhere in the middle, giving a balance of protection and clarity.
• A Flexible Life Interest Trust sits further towards the flexibility end. It provides trustees with more tools and options, albeit with more moving parts, yet still offers some protection.

The real question is not “Which trust is best?” but “Where should we set the balance between protection and flexibility for your family?”

Right to Occupy (briefly)

Right to Occupy is the simplest idea in this group:

• It gives someone the right to live in a property for a set period or for life.
• The right can end if they remarry, move in with a new partner or move permanently into care, depending on how it is drafted.

It can be beneficial in some specific situations. Because it has a narrower scope and fewer long-term planning features than the other trusts, we typically mention it as one of the tools rather than building a comprehensive plan around it. There is a separate short article on Rights to Occupy for families who need that option.

Property Life Interest Trust (PLIT) – protecting the home

A PLIT focuses on the family home itself.Typically:• You each own the home as tenants in common.
• On the first death, that person’s share of the property passes into the PLIT.
• The survivor has the right to live there for life (or as the trust dictates / as chosen when drafting).
• The property can be sold and replaced with a new home, with a trustee agreement.
• When the survivor dies, the trust share usually passes to the children or other chosen beneficiaries.

In principle, this helps:

• Protect each partner’s share of the home from being redirected by future Wills or remarriage.
• Give the survivor clear security that they cannot be forced out while the trust is in place.

In day-to-day terms, the survivor usually continues to live in and care for the home as they have always done. Trustees are involved in the background for significant decisions, such as selling and buying, rather than for every small choice.

You have no reasonable expectation of needing care, and it is not a primary concern for you; any care fee impact is a potential side benefit of the main reason you are considering the trust. Even so, many clients do worry about future care costs. A PLIT can sometimes help reduce the impact of means-testing on your share of the home, but this is not guaranteed, and decisions are always fact-specific.

PLITs are often chosen when the main priority is “no one loses their roof, and our share of the house still ends up with our children”. The dedicated Property Life Interest Trust article provides a more in-depth explanation of this structure.

Life Interest Trust (LIT) – income and clarity

A Life Interest Trust usually deals with the residue – the “what’s left” pot – and, if appropriate, your share of the home as well.

You are not limited to “property or residue”. In the right case:• All liquid assets (cash and investments) can go into the Life Interest Trust.
• The survivor might own half the house outright, with the other half in the trust.
• Or both the residue and your share of the home can sit inside the Life Interest Trust.

In a typical LIT:

• On the first death, the residue (and sometimes a share of the home) passes into the trust.
• The survivor (the “life tenant”) receives the income from those assets.
• Trustees can also allow them to use some of the capital where appropriate, for example, for repairs, health costs or helping children.
• On the second death, whatever is left passes outright to the named beneficiaries, usually in fixed shares.

Key points:

• It is usually simpler to run than more flexible structures.
• Because the home or its proceeds can pass outright to direct descendants on the second death, the Residence Nil-Rate Band is often easier to secure. Put simply, this can increase the amount that passes free of inheritance tax.
• It suits families where the children are broadly trusted and the main aim is to look after the survivor and then pass things on clearly.

A Life Interest Trust keeps control between deaths but still ends with a straightforward, fixed inheritance for the next generation.

The separate Life Interest Trust article provides more examples and technical details.

Discretionary powers – what “discretion” really means

“Discretionary” simply means that trustees choose:

• Who to help (from a defined group of potential beneficiaries).
• When to help them.
• How much to provide and in what form – gifts, loans or direct payments.

Nobody is automatically entitled to a set amount.

This can be very useful where:

• Some beneficiaries are young, vulnerable or poor with money.
• You want to support children or grandchildren at different stages, such as education, deposits and business help.
• You are worried about possible divorces, business failures or pressure from others.

We explain this in more depth in our Discretionary Trusts article. In this guide it matters because discretionary powers are the “extra layer” that can be added to a Life Interest Trust, especially in a FLIT.

Flexible Life Interest Trust (FLIT) – the modern blend

A Flexible Life Interest Trust combines a life interest with discretionary flexibility, allowing for a more adaptable approach.

Typically:

• The survivor is the life tenant, with the right to income and to live in the home.
• Trustees can also use discretionary powers to help children or grandchildren during the survivor’s lifetime, for example, with deposits or education.
• After the survivor dies, the trust usually converts into a Discretionary Trust for the next generation, so trustees remain in control of how and when the money is used.

This gives:

• Security for the survivor, as in a standard Life Interest.
• More tools for trustees to respond to real life – remarriage, house moves, health issues and tax changes.
• Ongoing protection and control after the second death, supervised by trustees.

The trade-offs:

• Tax and Residence Nil-Rate Band planning is more complex and always needs advice.
• There is more administration and more reliance on the trustees’ judgment.
• It is best suited to families who want that extra flexibility and are comfortable with the extra moving parts that come with it.

A FLIT is often the “modern family trust” – a blend of protection and flexibility for families whose future may not follow a straight line.

The Flexible Life Interest Trust article covers this in full, including worked examples and tax notes.

How the Residence Nil-Rate Band fits in – in outline only

The Residence Nil-Rate Band (RNRB) rules are detailed and subject to change. 

At a high level:

• RNRB is simplest where the main home (or its sale proceeds) goes outright to direct descendants.
• Structures like a Life Interest Trust can work well if the home ultimately passes that way at the second death.
• Where a home or share is kept inside a Discretionary Trust or FLIT long term, RNRB is not usually available because the property is not inherited outright.
• However, if trustees appoint the home (or a share of it) to direct descendants within two years of death, the law often allows RNRB to be “recovered”.

This is an area where we always consider your full estate picture and, where helpful, involve your accountant or financial advisor. The main point is that different trust shapes interact with RNRB differently, and we take that into account for you.

Cases – how the sliders work in real life

Case 1 – Second marriage, primary concern is the house
Martin and Claire are in a second marriage, each with children from previous relationships. Most of their wealth is in their jointly owned home. Their main worry is “Will my children still get something from my share of the house?”
We set the sliders towards protection on the property and moderate flexibility elsewhere. Their Wills use a Property Life Interest Trust for the home and simpler arrangements for cash. The survivor keeps a safe home; each person’s share of the property is still reserved for their own children.

Case 2 – First marriage, trusted adult children
Alan and Megan are in their first marriage with two adult children who are financially responsible. Their priority is to look after the survivor and then pass on the assets clearly.
We keep the sliders fairly balanced. They use a Life Interest Trust so the survivor has income and access to capital if needed. On the second death, the residue passes outright to the children. The planning is protective without being over-complicated.

Case 3 – Blended family and uncertain future
Sarah and Tom have children from previous relationships, may move house, and are unsure what their future work and health will look like. They want to protect each other but also keep options open for children and grandchildren.
Here, the sliders move further towards flexibility. They chose a Flexible Life Interest Trust so that trustees can support children at different stages while still giving the survivor security. The trust can adapt as life unfolds, albeit at the cost of increased trustee involvement.

Case 4 – Vulnerable beneficiary in the mix
Emma and Josh have two adult children. One is financially stable; the other struggles with mental health and money.
We increase protection for vulnerable children. Their Wills use a PLIT for the home and a combination of Life Interest and Vulnerable Person Trust or Discretionary features for the residue. Trustees can support each child differently without putting either at risk.

Case 5 – Right to Occupy as a niche solution
George owns his home outright and wants it to go to his children from his first marriage. He also wants his new partner to have a period of stability after his death.
In this specific case, we use a simple Right to Occupy, allowing his partner to live in the house for three years before it passes to the children. This sits at the protection-heavy, narrow end of the scale and is used because his situation is so particular.

Once we narrow things down to one or two trust shapes, there is often no single “perfect” answer – just the option that is most right for you with what we know today.

Ethical and governance note

For ethical and governance reasons, Fern Wills & LPAs does not take trustee appointments or create standalone lifetime trusts. However, Fern Wills & LPAs do create trusts that arise on death within Wills. Where a trust needs to be operated or registered, we will introduce you to an appropriate specialist to act and administer the trust. You remain free to choose your own adviser.

Next steps

This guide is designed as background reading and a recap, not a do-it-yourself plan.

In your meeting, we will:

• Talk about what you most want to protect and from what.
• Look at your home, other assets, relationships and any vulnerable beneficiaries.
• Use these trust shapes and sliders to sketch out a small number of realistic options.
• Agree on which structure (or combination) best reflects your priorities now, knowing life can still change.

You do not need to arrive knowing whether you “need a FLIT”. You just need to understand what matters to you. Our job is to match the structure to your goals.

If you would like to explore which approach might fit your family, Fern Wills & LPAs can explain the options in plain English, work alongside your existing professionals and guide you towards a Will that balances protection, flexibility and practicality for the people you care about.