When you own a property or part of a property in your own name, your Will determines what happens to that property. You may wish to give a loved one such as your partner or spouse (“the beneficiary”) the ability to live in a property, yet ensuring that it ultimately ends up with someone else. One way to do that is by allowing the beneficiary to reside in a property by giving them a Right to Reside or a Life Interest.
Right to reside
A right to reside is where you give the beneficiary the right to live in your property for the period specified in your Will. The right to reside can be for the life of the beneficiary or for a specified time, or until an event happens.
The beneficiary’s entitlement to live in the property is normally subject to conditions such as maintaining the property and paying property expenses. The beneficiary has a right to live in the property but not to any income it generates.
The beneficiary’s right in the property is relinquished once they have ceased residing in it. When their right to reside ends, the property can either be:
- sold and the proceeds paid to the “remainder” beneficiaries named in the Will; or
- transferred into the names of the beneficiaries.
Life Interest
Leaving your beneficiary a life interest in your property is similar to a right to reside, but it gives the beneficiary more power and rights in relation to the property. The beneficiary (“the life tenant”) retains the interest in the property for life. Upon their death, it reverts to the estate and is paid out in accordance with your Will.
The beneficiary has no entitlement to the capital of the property but is entitled to income generated from the property during their lifetime.
A life interest is a way of giving the beneficiary the right to use the property after you have passed away without them having actual ownership. The life tenant can live in the property or lease it and live off the proceeds. They can also sell the property and either use the sale proceeds to buy and live in a replacement property or invest the sale proceeds and live off the income. The life tenant cannot be forced to move out of the home or sell it against their wishes.
Contact us now for free no-obligation initial telephone advice and assistance if you are considering including in your Will a right to reside or a life interest.
