Jurisdiction(s):
United Kingdom

Key definition

Life interest definition

What does Life interest mean? In practice, a life interest (often under a life interest trust) is a beneficiary’s right to receive trust income and/or to use or occupy trust property for their lifetime, without any right to the capital, which is preserved for remaindermen. Often termed an interest in possession, it is a descriptive trust law concept rather than a statutory definition, though UK inheritance tax legislation (for example, the Inheritance Tax Act 1984 on interests in possession and immediate post-death interests) and Irish Capital Acquisitions Tax legislation use it to determine tax treatment. Life interests are typically created by will trusts or...

Cayman Islands trusts: legal framework, types, reserved powers and protectors, STAR and charitable trusts, taxation, conflict of laws, forced heirship and practical applications

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Practice notes

Most common types of trusts

Under Cayman Islands trust laws, a range of trusts can be established, including:

Discretionary trusts
STAR trusts
Life interest trusts
Fixed interest trusts
Charitable trusts
Exempted Trusts

Each of these trusts is outlined in more detail below.

Discretionary trusts

A discretionary trust usually delivers the highest degree of flexibility. It is the most commonly adopted format and is often the most effective arrangement for both the settlor and the beneficiaries. The trustee is granted extensive discretion over the timing, scale, and recipients of distributions from both income and capital. This structure is advantageous where, at the point the trust is created, the future circumstances of beneficiaries cannot be clearly defined and are expected to shift over time. Beneficiaries are not treated as holding any specific legal entitlement to a particular share of the trust fund, but instead have only the right to be considered when the trustee exercises its discretion...

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Web page updated on 21/05/2026

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