Flexible Life Interest Trusts (FLITs)

You have opened the Will expecting a simple sentence: "I leave everything to my wife" or "to my husband". Instead you find pages of trust wording: a "life interest" for the surviving spouse, "trustees", "overriding powers of appointment", a list of "discretionary beneficiaries". The first reaction is often alarm. Has the survivor been cut out? Is the money locked away?

Almost always, the answer is no. A Flexible Life Interest Trust (usually shortened to FLIT) is one of the most widely used structures in professionally drafted Wills for couples, particularly where there are children, a second marriage or concerns about the survivor's later years. The person who died chose it deliberately, to look after their spouse for life while making sure the family's capital ends up where they intended. This factsheet explains what the clause means and what to do about it.

What a FLIT actually is

A trust is an arrangement where one set of people, the trustees (the people who legally hold and manage the assets), look after assets for the benefit of others, the beneficiaries, under rules set out in the trust document (here, the Will itself).

A FLIT has two layers:

The life interest. The surviving spouse or civil partner is the life tenant (the person entitled to benefit during their lifetime). They have the right to all the income the trust assets produce (rent, interest, dividends) and, where the family home is in the trust, the right to live in it. Because this right starts immediately on death under a Will, it is known for tax purposes as an immediate post-death interest, or IPDI.

The flexibility. Unlike a basic life interest trust, the trustees of a FLIT also hold overriding powers of appointment (powers letting them redirect capital, during the survivor's lifetime or after, to a wider class of beneficiaries, typically children and grandchildren). Trustees can usually also advance capital to the survivor if they need it. A confidential letter of wishes (a non-binding note from the person who died explaining how they would like the powers used) often sits alongside the Will; ask whoever drafted it whether one exists.

That mix (security for the survivor, capital kept for the children) is exactly why the person who died chose it.

Why people set up FLITs

Protecting children's inheritance in blended families. Leaving everything outright to a spouse means the spouse then owns it absolutely and can leave it wherever they choose. In second marriages especially, that can mean children from a first relationship receive nothing. A FLIT lets the survivor benefit for life while the capital is preserved for the children named in the Will.

Guarding against remarriage and "sideways disinheritance". If the survivor remarries, an outright inheritance can drift to a new spouse and their family through a new Will, intestacy (marriage revokes earlier Wills) or merged finances. Trust assets do not belong to the survivor and cannot be redirected this way. See Intestacy: Who Inherits Without a Will for why remarriage is such a pressure point.

Care fee exposure. If the survivor later needs residential care, the local authority assesses the survivor's own assets. Capital held in a properly established Will trust of the first to die is not normally the survivor's asset, so it should fall outside that assessment, although the survivor's income is usually counted and outcomes depend on the facts. This is legitimate first-death planning, unlike the lifetime schemes we warn about in Care Fees & Your Home: Myths vs Facts.

Flexibility. Nobody knows, when a Will is written, what the family will need decades later. The overriding powers let trustees release capital to a child who needs it, hold back from a child mid-divorce or restructure for tax, guided by the letter of wishes.

How a FLIT works for Inheritance Tax

On the first death. Because the survivor's life interest is an IPDI, tax law treats the survivor as if they owned the trust assets. Where the surviving spouse or civil partner is a long-term UK resident, the unlimited spouse exemption applies; if they are not, the exemption is capped at £325,000 unless an election is made, so take advice. Where the exemption applies in full, no Inheritance Tax is normally payable on assets passing into the FLIT, and the deceased's nil rate band (the £325,000 IHT-free allowance, frozen until April 2031) and residence nil rate band (up to £175,000 where a home passes to direct descendants, tapered away for estates over £2 million) are generally unused and can usually be transferred for the second death.

On the second death. The trust fund is added to the survivor's own estate and taxed as one, at 40% above the available allowances (36% where at least 10% of the taxable part of the estate, broadly what is left after debts, exemptions and the nil rate band, passes to charity). With both sets of allowances potentially available, a couple can often pass on up to £1 million free of IHT, depending on circumstances.

The residence nil rate band needs care. It is only available where the home passes to direct descendants outright or on certain qualifying trusts; advice is needed where a trust is involved. If the fund is still sitting in the discretionary layer of the FLIT when the life tenant dies, the allowance is generally lost and cannot be recovered afterwards. The trap can only be defused during the survivor's lifetime, so trustees should take advice well before the second death, not after it.

Using the overriding powers during the survivor's lifetime. If trustees appoint capital away from the life tenant, the law treats that as a gift by the survivor: usually a potentially exempt transfer (a gift that escapes IHT if the survivor lives seven more years) if outright, or an immediately chargeable transfer if onto continuing trusts. These powers should never be exercised until the tax consequences have been worked through with a specialist.

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What executors and trustees need to do now

A worked example

Raj and Meera are both in second marriages, each with two children from their first. Raj dies, and £650,000, including his half share of the family home, passes into a FLIT with Meera as life tenant and all four children in the discretionary class. No IHT is payable on Raj's death because of the spouse exemption. Meera lives in the home and receives the income for eleven years. When she later moves into residential care, the trust capital is not hers and, on these facts, falls outside the local authority's assessment of her own capital, though her income from the trust is counted. Before Meera's death, the trustees take advice and arrange matters so that Raj's share passes to his two children on her death, preserving the residence nil rate band, and Meera's own estate passes under her Will to hers. Both sets of children inherit as intended. This is a hypothetical example for illustration only.

Common mistakes

The survivor treating trust assets as their own. Trust capital is not the survivor's money. Mixing it with personal accounts or spending capital without a trustee decision undermines the protection and creates real legal and tax problems.

Never registering the trust. Many family trustees do not know the Trust Registration Service exists. Check, and register if required.

Exercising the overriding powers casually. An appointment of capital away from the life tenant is treated as a gift by the survivor, with a seven-year IHT clock. Ask a STEP-qualified adviser to check the position before any deed is signed.

Leaving the fund in the discretionary layer until the life tenant dies. If the assets are still there at the second death, the residence nil rate band is generally lost and cannot be recovered afterwards. The position must be reviewed during the survivor's lifetime, well before the second death.

Collapsing the trust without understanding why it was created. Appointing everything outright to the survivor is sometimes possible, but it destroys the protections the deceased paid to put in place.

Losing the letter of wishes. It is the trustees' best guide to the deceased's intentions.

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This factsheet is general information for England and Wales, not legal, tax or financial advice. Last reviewed: June 2026.