What is a life interest trust?
A life interest trust gives one beneficiary — the life tenant — the right to income from the trust, or to live in a property, for life. The capital then passes to others, the remaindermen. It separates who benefits now from who owns eventually.
Its classic use is the second marriage: the surviving spouse keeps the home and the income for life, and on their death the capital passes to the children of the first marriage rather than to the survivor's new family. It achieves what mirror wills cannot.
Where the interest arises on death under a will, it is an immediate post-death interest, and the trust assets are treated as part of the life tenant's estate for inheritance tax — so the spouse exemption applies on the first death and tax is deferred to the second.
It is sometimes marketed as a way to shelter half a home from care fees. Local authority deprivation of assets rules make that argument far weaker than the marketing suggests, and it should not be the primary reason for using one.