What Is A Flexible Life Interest Trust?

A Flexible Life Interest Trust, often shortened to FLIT, is a type of trust that can be written into your Will. It allows you to provide for your surviving partner during their lifetime while protecting the underlying assets for other beneficiaries, such as your children, later on.

In simple terms, instead of leaving assets directly to your partner, those assets are placed into a trust when you die. Your partner can then benefit from them, usually through income and sometimes through access to capital if the trust allows it. When they die, the remaining assets pass to the final beneficiaries you have chosen.

A Flexible Life Interest Trust can be a useful option if you want to do two things at once: make sure your partner is looked after, while also keeping greater control over who should ultimately inherit your estate. This is one reason why it is often considered in blended families, second marriages and wider estate planning.

Quick answer

A Flexible Life Interest Trust allows assets from your estate to pass into a trust when you die instead of going directly to your surviving partner. Your partner can benefit from those assets during their lifetime, usually through income, while the underlying capital is protected for the final beneficiaries you have chosen, such as your children. Depending on how the trust is drafted, the trustees may also have the power to lend or appoint some capital if needed.

How does a Flexible Life Interest Trust work?

During your partner’s lifetime, they are usually the main beneficiary of the trust. In many cases, this means they can receive income from the trust assets. If the trust includes a property, they may also have the right to live in it, depending on how the Will has been drafted.

A key feature of this type of trust is what happens after the life tenant dies. Rather than the trust simply ending and the capital passing automatically to fixed beneficiaries, it will usually continue as a discretionary trust. This means the trustees can decide who should benefit, when they should benefit, and to what extent.

That flexibility is one of the main advantages of a Flexible Life Interest Trust. It allows trustees to take account of the family’s circumstances at the time, rather than relying entirely on decisions made many years earlier. Depending on the wording of the trust, the trustees may also have the power during the life tenant’s lifetime to advance, lend or appoint some of the capital if that becomes appropriate.

Why might someone use a Flexible Life Interest Trust?

People often consider a Flexible Life Interest Trust when they want to balance support for their partner with protection for the long-term inheritance of their family.

It can be particularly helpful where:

• you are in a second marriage or long-term relationship
• you have children from a previous relationship
• you want to support your partner without leaving everything outright
• you want more control over where your assets eventually pass
• you want trustees to have some flexibility in future

For many families, the main benefit is that a surviving partner can still be provided for, while the assets are better protected for the people you want to benefit later.

Flexible Life Interest Trust vs standard Life Interest Trust

A standard life interest trust usually gives the surviving beneficiary the right to receive income from the trust assets, but not the capital itself. The capital is preserved for the final beneficiaries.

A Flexible Life Interest Trust starts from the same basic position, but gives the trustees wider powers. This can allow them to respond to changing needs and family circumstances rather than being tied to a more rigid structure.

That flexibility can be particularly valuable where family situations, finances or tax rules may change over time.

Who is a Flexible Life Interest Trust suitable for?

A Flexible Life Interest Trust can be suitable in a range of situations, but it is often most useful for families who want both protection and flexibility.

Blended families

If you want to make sure your current spouse or partner is looked after, but also want to protect assets for children from an earlier relationship, a Flexible Life Interest Trust can help you achieve both aims.

Families who want long-term control

Some people are comfortable providing support during their partner’s lifetime, but do not want the whole estate to pass outright and then potentially be redirected later.

Estates with different types of assets

Flexible Life Interest Trusts can be used as part of wider estate planning where there is property, savings, investments or other assets that need careful consideration.

In some cases, it may also be helpful to look at other family and property trust options depending on the type of protection you want to put in place.

What are the benefits of a Flexible Life Interest Trust?

Financial security for your partner

Your partner can still benefit from the assets during their lifetime, which can offer reassurance and stability.

Protection for your chosen beneficiaries

Because the assets are held in trust, there is more control over who should eventually inherit them.

Greater flexibility

Trustees may be able to react to changing circumstances rather than being limited to a strict income-only arrangement.

A practical option for blended families

Where family structures are more complex, a Flexible Life Interest Trust can provide a more balanced solution than an outright gift.

Are there any disadvantages or risks?

A Flexible Life Interest Trust can be very useful, but it is not right for everyone.

Trusts need to be drafted carefully. The wording matters, and the trustees’ powers need to reflect what you actually want to happen. If the trust is poorly drafted, it can create uncertainty, disputes or unintended outcomes.

You also need to choose your trustees with care. They will be responsible for managing the trust and making important decisions, so it is important that they are trustworthy, capable and willing to act in line with your wishes.

It is also worth remembering that trusts can have tax and administrative implications. What is suitable for one family may not be suitable for another, which is why proper advice is so important.

When might a Flexible Life Interest Trust not be the best option?

A Flexible Life Interest Trust can be very effective, but it is not automatically the right choice in every case.

For example, if your wishes are straightforward and you are happy for everything to pass outright to your spouse or partner, a FLIT may add unnecessary complexity. Equally, if your family circumstances are particularly sensitive, or there is likely to be disagreement between beneficiaries, the choice of trust structure and trustees becomes especially important.

A FLIT should not be chosen simply because it sounds like a way to avoid all future problems. It may help with control and protection, but it does not remove the need for careful drafting, sensible trustee appointments and proper advice.

The right solution depends on your family, your assets, your priorities and what you want the trust to achieve.

Common misunderstandings about Flexible Life Interest Trusts

There are a few common misunderstandings about Flexible Life Interest Trusts that are worth clearing up.

One is that they are only for very wealthy families. In reality, they can be relevant whenever someone wants to balance support for a partner with protection for children or other beneficiaries.

Another is that a FLIT guarantees protection in every situation. In practice, the trust only works as well as the drafting and the people appointed to run it.

It is also easy to assume that flexibility means the surviving partner can do whatever they like with the trust assets. Usually, that is not the case. The assets are held by the trustees, who must act in line with the terms of the Will and their duties as trustees.

Finally, some people assume that a FLIT is mainly about tax. Tax can be part of the wider picture, but in many cases the real reason for using this type of trust is to balance financial support, protection and control.

Why do trustees and a letter of wishes matter?

A Flexible Life Interest Trust will only work as intended if the right trustees are in place and they understand the purpose of the trust.

This is where a letter of wishes can be especially helpful. Although it is not usually legally binding, it gives your trustees guidance about how you would like them to approach decisions in future.

For example, you may want to explain how your partner should be supported, when capital should be preserved, or what your longer-term priorities are for children or other beneficiaries. This can make it easier for trustees to make decisions in a way that reflects your intentions.

Is a Flexible Life Interest Trust right for you?

A Flexible Life Interest Trust can be a very effective option if you want to support your partner while also protecting what should eventually pass to your children or other loved ones.

It is often worth considering if you have a blended family, are in a second marriage, or want more flexibility than a standard life interest trust can provide.

That said, the right solution always depends on your circumstances. The structure of your family, the assets you own, your longer-term wishes and the potential tax implications all need to be considered carefully.

How ELM Legal Services can help

If you want to provide for your partner while protecting what should eventually pass to your family, we can help you understand your options and put the right plans in place.

We offer a free initial meeting, giving you the chance to talk through your circumstances and understand whether a Flexible Life Interest Trust may be the right option for you and your family.

Get in touch today to speak to a member of our friendly team.

Frequently asked questions about Flexible Life Interest Trusts

Can a Flexible Life Interest Trust help protect assets after remarriage?

It can help provide greater protection because the assets are held in trust rather than being inherited outright by the surviving partner. That can reduce the risk of those assets being redirected away from the intended beneficiaries later on.

Do I need a letter of wishes with a Flexible Life Interest Trust?

A letter of wishes is not always legally required, but it is often very helpful. It can give trustees guidance about how you want them to use their powers and what you want the trust to achieve for your family.

Are Flexible Life Interest Trusts only for wealthy people?

No. They are not just for very large estates. Whether a Flexible Life Interest Trust is appropriate depends more on your family circumstances, your wishes and the type of protection or flexibility you want, rather than simply the size of your estate.

Can a Flexible Life Interest Trust help with inheritance tax?

It can form part of wider estate planning, but the tax position depends on the particular circumstances. Trusts and tax can be complex, so it is important to take advice based on your own situation rather than assuming a FLIT will automatically produce a tax advantage.