How do life interest wills work?

[ssd]

Dh and i have mirror wills, quite straightforward and simple. We have 2 kids, no other kids. We are married. I keep hearing about life interest wills. How do these work? And what would happen if one of us needs care in later life? Like going into a home? Is a life interest will expensive to get, the mirror will was basically free.
Im basically trying to protect the dcs from losing any inheritance we can leave them, eg the house.
Thanks.

I understand we'd have a life interest in this house but what if we wanted to move to something smaller?

The house is worth about 180k just now.

IANAL, but basically the house is held legally by someone else for the benefit of the surviving spouse. The house can be sold and another house bought but this too is held on trust. The when the surviving spouse dies, or usually remarries, they no longer have the right to the house and it passes to the kids.

You do need a solicitor to set it up properly and you can do for a few hundred pounds.

It means if your DH predeceases you and his share of assets are to go to the DC, you are still able to live in his share of the house until you die.

Best to talk to a solicitor if you’re interested.

I’ve looked at these and it looks pretty complicated and I would expect you would need a Solicitor who specialises in Trusts and I know these are very expensive and usually for people with big expensive properties/businesses and lots of money in the bank.

My parents had this, and now we do.

When Mum passed a trust was created owning her half of the house. Dad can remain living there but if he needs care, only his half and his savings can be used to fund it.

We used a Will Writer who also checked we held the house in the correct manner to be able to do this. The wills are still mirror wills as they both have the trust built into them. We paid £240 for both.

We also did POAs whilst we were doing it which cost extra, but they are done now

@Mindymomo

I think you are thinking of things like Discretionary Trusts. The Life Interest ones are a pretty routine provision now.

If you own your home as Joint tenants, then upon the first death ownership falls onto the other spouse. The house cannot be willed. Nor can it be included in a financial assessment should one of you need care in later life. It will, however, be fully included after the first death should the surviving spouse require care.

If, however, you own it as tenants in common, then you can gift your share of the house to your children in your will whilst adding a clause that allows the surviving spouse to remain in the house until they either remarry, cohabit or go into long term care. Again, it would be rare for it to be included in a financial assessment should one of you need care - but it’s not absolutely certain this would be the case especially if it’s an expensive house and there is enough equity in half the house to buy another house for the person not needing care. If, following the death of the first spouse the surviving spouse required care, the share of the house they own would be taken into account in the financial assessment.
One thing to consider is, what sort of care would you want to have in later life? Care homes vary vastly - my stepfather is in one and most of his care is paid for by the local authority but it’s pretty grim.
Also, whilst you’re sorting out wills, have you thought of Power of Attorney for each of you? Should you lose capacity in later life, giving someone POA who can act on your behalf is very useful.

Actually that’s not true. My DMs house was only worth £120k, she set up a trust when she bought it - the conveyancing solicitor sorted it out - and the house was owned as tenants in common 80/20 in her favour.

Slight tangent

It's a good idea to set up POA for each other, very simple to do even without any input from a solicitor https://www.gov.uk/government/publications/make-a-lasting-power-of-attorney

That sounds like a Declaration of Trust? Which is definitely not the same as setting up a Trust or life interest - a conveyancing solicitor couldn’t do that.