Legal Tip 78: What is a life interest in property?

Discussion in 'Legal Issues' started by Terry_w, 19th Sep, 2015.

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  1. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    18th Jun, 2015
    What is a life interest in property?

    There are many different interests in property, one interest that used to be popular is the life interest. This sort of interest arises when someone gives someone else certain rights over property without actually giving them title to the property. These rights may be rights of possession – they will not own the property but may live in the property like it was their own. Other rights might be rights to income – so someone could get the income from renting the property without actually owning the property.

    These, life interests, were common in wills many years ago. They are still used today, but more flexible testamentary trusts have largely meant not many people give life interests these days. However they still have their place.

    Example. Mum has remarried and has children from her first marriage and a new bloke. If she dies she wants her property to go to her kids, but she doesn’t want to kick out the bloke so she decides to leave him the right to reside in the property until his death and then the property will pass to her kids.

    There are many issues, naturally, and I will talk about some of these next time.