Drawing up a Life Interest Trust is an effective way for someone to preserve their assets for their children. At the same time, it can still be used to provide a benefit to the surviving spouse while they are still alive. On the death of the 'settlor' (the person setting up the trust), the asset is held in trust for the surviving spouse or partner, but ultimately for the beneficiaries named in the Will. It's primary use is to protect a person's share of a family home for their children in the event their spouse remarries after their death. However, it is also used if a person has children from a previous relationship and remarries. The trust will allow the Settlor's spouse to remain in the property for the remainder of their life but the capital will ultimately go to the Settlor's children when the surviving spouse dies.
From a tax point of view, no additional income tax is paid by the Trust. A notable advantage of a Life Interest Trust is that, when set up correctly and with due regard to how local authorities calculate assets, it can protect your property's value being eroded by the cost of care in later life.