Flexible Life Interest Trusts – A Clever Solution, but Are They Right for You?
6 November 2026
One of the difficulties with making a Will is trying to anticipate what might happen many years into the future.
You might want to make sure your husband or wife is comfortably provided for after your death, but you also want to be certain that your children eventually inherit. And what happens if their circumstances change in the meantime?
Perhaps one of your children gets divorced, has financial problems or develops an illness that makes managing money difficult.
This is where a Flexible Life Interest Trust, usually shortened to FLIT, can be worth considering.
It’s a type of Will trust that combines providing for a surviving spouse or civil partner with considerable flexibility over how the inheritance is eventually passed on.
It sounds attractive, and in the right circumstances it certainly can be. However, there are some disadvantages that deserve just as much attention as the benefits.
What is a Flexible Life Interest Trust?
In simple terms, a FLIT allows you to leave assets in trust when you die, rather than giving them outright to your spouse or civil partner.
Your surviving spouse will usually have the right to receive income produced by the trust throughout their lifetime. The trustees may also have powers to make capital available when needed.
For example, the trust might contain investments worth £300,000.
Your spouse could receive the income from those investments, and the trustees might have authority to release some of the capital if your spouse needed money for a replacement home, medical expenses or other purposes.
However, the capital belongs to the trust. Your spouse doesn’t automatically have the right to demand that it be handed over.
That distinction is important.
The trust can provide financial security for your spouse while keeping the underlying assets available for your children or other chosen beneficiaries.
What Makes It Different from an Ordinary Life Interest Trust?
A conventional Life Interest Trust usually provides for one person during their lifetime, with the remaining assets passing to named beneficiaries when that person dies.
A Flexible Life Interest Trust goes a stage further.
When the surviving spouse dies, the assets don’t necessarily pass directly to the children.
Instead, the trust normally continues as a Discretionary Trust.
This gives the trustees the freedom to decide when and how the beneficiaries receive their inheritance.
They might distribute the money immediately, make payments over several years, provide financial assistance when needed or continue holding the assets in trust.
That flexibility can be particularly valuable when family circumstances have changed.
A Practical Example
Imagine that Michael and Susan are married with two adult children, Andrew and Rebecca.
They own their home and have some savings and investments.
They want the survivor to be financially secure, but ultimately they want their estate to benefit their children.
They make Wills incorporating Flexible Life Interest Trusts.
Michael dies first, and his share of the estate passes into the trust.
Susan receives the income from the trust assets, and the trustees can provide additional financial assistance if necessary.
Several years later, Susan dies.
By this time, Andrew is experiencing serious financial difficulties and Rebecca is going through a divorce.
If the children had become automatically entitled to their inheritance, Andrew’s money could potentially be exposed to creditors and Rebecca’s inheritance could become relevant to her divorce settlement.
Because the assets remain in a discretionary trust, the trustees have other options.
They could retain Andrew’s inheritance and provide carefully controlled financial assistance. They might also delay distributing capital to Rebecca while her circumstances are being resolved.
The important difference is that the trustees can respond to circumstances as they actually exist, rather than being forced to follow a decision made perhaps 20 years earlier.
Of course, trust protection isn’t guaranteed. Courts, creditors and tax authorities may still have claims or powers depending on the circumstances.
Could a FLIT Protect Your Children if Your Spouse Remarries?
This is another potential advantage.
Suppose you die and leave everything outright to your spouse.
Years later, your spouse remarries and makes a new Will leaving everything to their new partner.
Your children could receive considerably less than you originally intended, or potentially nothing at all.
This is sometimes called sideways disinheritance.
Where assets are held in a properly drafted FLIT, your spouse cannot simply leave those trust assets to a new partner through their own Will.
This can help preserve the inheritance you intended for your family.
However, remember that trustees may have powers to distribute capital during your spouse’s lifetime. The actual protection therefore depends on the trust wording, the trustees and the decisions they make.
Who Controls the Trust?
This is something I believe deserves particular attention.
The trustees are responsible for managing the assets and deciding how to exercise the powers given to them.
They might include your spouse, adult children, other trusted individuals or professional trustees.
Choosing them carefully is essential.
Imagine appointing your surviving spouse and your two children as trustees. What happens if the spouse wants money for a new property but the children are reluctant to agree?
Or what if one child believes another is receiving preferential treatment?
Flexibility is only an advantage when it is exercised sensibly.
The Will should contain appropriate provisions, and the trustees should understand their responsibilities.
Don’t Forget the Letter of Wishes
I would normally recommend considering a Letter of Wishes alongside a discretionary arrangement.
This allows you to explain what you hope the trustees will do.
For example, you might say that your spouse’s comfort and financial security should take priority during their lifetime, while asking the trustees to be particularly careful about distributing money to a beneficiary experiencing financial problems.
A Letter of Wishes isn’t normally legally binding, but it can provide invaluable guidance.
What About Inheritance Tax?
This is where things become more complicated.
A Flexible Life Interest Trust should not be regarded as an automatic way of saving Inheritance Tax.
Where the trust is created by Will and gives the surviving spouse an immediate qualifying life interest, it will normally be treated as an Immediate Post-Death Interest for Inheritance Tax purposes.
This means that the assets passing into the trust can qualify for the spouse exemption on the first death, subject to the usual rules.
However, the assets will normally be treated as part of the surviving spouse’s estate for Inheritance Tax purposes when they die.
That’s an important distinction.
Although the surviving spouse doesn’t own the trust assets outright or control their destination through their Will, the value may still be counted when calculating their Inheritance Tax liability.
When the life interest ends and the assets continue in a discretionary trust, different tax rules apply. These may include charges on ten-year anniversaries and when assets leave the trust.
Capital appointments made during the surviving spouse’s lifetime can also have tax consequences.
So the trust may provide valuable family protection and flexibility without necessarily reducing the family’s overall Inheritance Tax bill.
The Residence Nil Rate Band – An Important Warning
This is probably the biggest potential drawback where the family home is involved.
The Residence Nil Rate Band is an additional Inheritance Tax allowance, currently up to £175,000 per person, subject to various conditions.
For a married couple or civil partners, the combined potential allowance can be as much as £350,000.
But there is a catch.
Broadly, the allowance depends on a qualifying home being inherited by direct descendants, such as children or grandchildren.
Certain trusts qualify, but an ordinary discretionary trust generally does not.
Now consider what happens with a FLIT.
On the first death, the surviving spouse’s qualifying life interest can be treated appropriately for Inheritance Tax purposes.
But when the surviving spouse dies, the FLIT normally becomes a discretionary trust.
If the family home remains within that discretionary arrangement, the children may not be treated as inheriting it in the way required for the Residence Nil Rate Band.
The result could be the loss of a valuable Inheritance Tax allowance.
In some cases, that could mean tens of thousands of pounds in additional tax.
There are ways of drafting Wills to address this issue. For example, the home could be dealt with separately, or the trust could contain provisions allowing qualifying assets to pass appropriately to descendants.
However, these arrangements must be considered when the Wills are prepared. It is dangerous to assume that the trustees can always put things right afterwards.
Are There Other Disadvantages?
Yes, and they shouldn’t be overlooked.
A FLIT can be more complicated than an ordinary Will trust.
There may be additional costs for professional advice, trust administration, tax returns and record keeping.
Trustees need to understand their responsibilities, keep appropriate records and ensure that any required registrations are completed.
There can also be Income Tax and Capital Gains Tax consequences, particularly where investments or property are involved.
And because the trustees have discretion, beneficiaries do not necessarily have a guaranteed entitlement to receive particular assets at a particular time.
For some families, that flexibility is exactly what they need.
For others, it introduces unnecessary uncertainty and expense.
Is a Flexible Life Interest Trust Better Than a Property Protection Will Trust?
Not necessarily.
A Property Protection Will Trust is often a simpler arrangement, particularly where the main objective is to protect a share of the family home for children while allowing the surviving spouse to continue living there.
A FLIT potentially goes further by giving trustees more flexibility over assets and what happens after the surviving spouse’s death.
But greater flexibility comes with greater complexity.
If the family circumstances are straightforward, a conventional Property Protection Will Trust may achieve everything that is needed.
If there are vulnerable beneficiaries, complicated family relationships or substantial assets, the additional flexibility of a FLIT might be worth considering.
The right choice depends on what you are trying to achieve.
My View – Don’t Choose a Trust Just Because It Sounds Impressive
There are some excellent reasons for using Flexible Life Interest Trusts.
They can provide for a surviving spouse, help protect assets for children and allow trustees to respond intelligently to changing circumstances.
But they aren’t suitable for everyone.
In particular, I would want to examine the potential Inheritance Tax consequences, including the Residence Nil Rate Band, before recommending one.
I would also want to know who the trustees would be, whether they were likely to work well together and whether the family really needed the additional flexibility.
The purpose of estate planning isn’t to create the most complicated Will. It’s to put arrangements in place that are most likely to work for your family when they’re needed.
Sometimes a Flexible Life Interest Trust will be the answer.
Sometimes a simpler trust will be better.
And sometimes a straightforward Will, without any complicated trusts at all, is perfectly sufficient.
The important thing is understanding the differences before making your decision.
This article provides general information about estate planning in England and Wales. Trust and tax arrangements can be complicated, and individual circumstances should be considered before taking action. The law and tax treatment may change.