2 min read
24 Oct
24Oct

By including a right-to-reside clause/ trust in your will, you specify that you give someone the right to live/reside in one of your properties. You can specify within this clause if this arrangement is for a set time, such as for the rest of the person’s life. A key benefit of using a right to reside clause in your will rather than leaving your property as part of your estate to be distributed is that you can specify what happens to the property after the person has passed away or decides to no longer live there. You can also include details about who is responsible for household costs such as energy bills, council tax, and mortgage. 

A common scenario A typical situation where this is a useful technique is where there is a sole owner of a property who has a partner living with them but has children from a previous relationship. Options should they die would usually be: 

  • Gift the house to those children (but then what happens to the partner – where do they live, as they have no right to continue to live in the house)
  • Gift to the partner and hope they ‘do the right thing’ when they pass away and gift the house to their partner’s children.

The right of residence provides a best-fit solution: 

  • It provides a right for the partner to live in the house once the owner has died
  • The testator could decide whether that right continues for the life of the partner or whether it needs to be time-restricted (i.e. for a couple of years) or event-restricted (not advisable but, for example, should the partner marry or no longer use the house as principle residence.
  • The trust almost always relates to the house owned by the testator so that should the life tenant/renter leave the house, the right comes to an end, and the children – the remaindermen of the trust – then inherit absolutely. It is unusual for the testator to provide a right to allow the life tenant/renter to request the trustees sell the original house and buy another on their behalf on the same terms as the original trust property, but it can be done. Trustees then own the house and cannot sell it unless agreed by the partner

 Sole Ownership If you solely own the home but want your children to be the ultimate beneficiaries, you could give your partner the right to occupy it and have the peace of mind that the property will be passed to your children when your partner dies. 

Joint Ownership – Tenants In Common Another example is if you own the home jointly with a partner but have children from a previous relationship, you want to benefit. If the house is owned jointly, it needs to be owned as tenants in common to benefit from a right of occupation. 

Joint Ownership – Joint Beneficial tenants If you make a trust will regarding a property but still own the home as joint tenants, the house will pass to the surviving owner outright, regardless of what is in the Will. 

How do right-to-reside trusts work? In most cases, a trust is created from the will when a right-to-reside clause is used and in place for a set time. The trust will specify the trustees responsible for overseeing the trust conditions and ensuring that they are followed. Your property is put into trust and legally governed by the rules you choose to include. This means that the beneficiaries of your property cannot sell it until the trust conditions are met. The trust owns the property, not the beneficiaries, while the trust is active. Once the conditions of the trust are fulfilled, the trust can sell the property, and the funds raised from the sale can be distributed to the beneficiaries per your wishes.

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