FLEXIBLE LIFE INTEREST TRUST (FLIT)

What is a Flexible Life Interest Trust?

A Flexible Life Interest Trust (FLIT) is an estate planning arrangement that allows you to provide for your spouse after your death while protecting assets for your children or other beneficiaries. The trust gives your spouse (the "life tenant") the right to benefit from the income generated by trust assets during their lifetime, while preserving the capital for your ultimate beneficiaries.

Why Consider a FLIT for Your Family?

For married couples with children who own a residential property and cash savings, a FLIT offers several important advantages:

• Protection for your spouse – Ensures your spouse can continue to live in your home and benefit from your assets
• Security for your children – Guarantees your children will ultimately inherit your share of the family wealth
• Protection against "sideways disinheritance" – Prevents your assets from passing to a new spouse if your partner forms a new relationship
• Care home fee protection – Will help shield assets from being fully depleted by long-term care costs
• Flexibility when needed – Your spouse and children as trustees can release capital to your spouse if circumstances require

How It Works in Practice

1. Upon first death, the deceased spouse's share of assets passes into the FLIT
2. The surviving spouse continues to live in their home and receives income from trust assets
3. Your spouse and children typically act as trustees, managing the trust with discretionary powers
4. Trustees can provide capital to the surviving spouse when needed for their wellbeing
5. When the surviving spouse passes away, the trust assets pass to the ultimate beneficiaries (typically your children)
6. Assets can remain in trust if required to protect them for your children

Financial Planning Recommendation

Asset Equalisation Strategy: We recommend equalising cash assets between spouses during your lifetime where possible. This approach:

• Creates a more balanced estate structure
• Ensures optimal funding of the trust regardless of which spouse dies first
• Provides greater certainty for your family's financial future

Key Benefits Summary

• Provides lifetime security for your surviving spouse
• Guarantees inheritance for your children
• Offers protection against remarriage scenarios
• Will provide care fee protection after the first death
• Maintains flexibility through trustee powers
• Gives you peace of mind about your family's future

Next Steps

To discuss how a Flexible Life Interest Trust could benefit your specific family circumstances, please contact us to receive personalised advice on how to structure your estate planning to achieve your goals of providing for your spouse while protecting your children's inheritance.