Yes, a Flexible Life Interest Trust (FLIT) can be adapted for unmarried couples, but it won’t deliver the same inheritance tax (IHT) benefits as it does for married couples or civil partners. Cohabitees don’t qualify for the spouse exemption or transferable nil rate band, so a FLIT for a cohabitee is mainly about protecting your partner’s right to live in the home and control what happens to your assets, rather than IHT savings.

What Is a Flexible Life Interest Trust?

A Flexible Life Interest Trust (FLIT) is written into a will and only takes effect when the first partner dies. It’s a type of trust designed to split your estate between your surviving partner and your ultimate beneficiaries, usually your children.

Here’s how it typically works:

• On the first death, assets are placed into the trust rather than passed outright.
• The surviving partner (called the “life tenant”) can live in the property rent-free and receive income or loans from the trust.
• Trustees can also advance capital to other named beneficiaries during the life tenant’s lifetime, if needed.
• When the life tenant dies, the trust capital passes to the beneficiaries named in the original will.

For married couples, this structure is often described as the ideal modern will, because it protects the surviving spouse while ring-fencing the trust assets from future remarriage, care fees, or a new partner’s family.

Why Cohabiting Couples Face Different Inheritance Tax Rules

Before looking at how a FLIT applies to unmarried couples, it’s worth understanding why their tax position differs so much from that of married couples in the first place.

Under UK law, only spouses and civil partners benefit from:

• The spouse exemption means that anything left to a spouse or civil partner is free of inheritance tax, regardless of value.
• The transferable nil-rate band allows a surviving spouse to claim any unused portion of the £325,000 allowance from the first partner who died.
• The transferable residence nil rate band (RNRB), worth up to £175,000 per person when a home passes to direct descendants, again transferable between spouses.

Cohabitees get none of this. If you’re unmarried and leave assets to your partner, that gift is treated the same as a gift to anyone else, meaning it can be taxed at 40% above your own nil-rate band. Your partner also can’t inherit your unused allowance later.

This is the single biggest reason cohabiting couples need estate planning advice that goes beyond a basic will.

Can a FLIT Work for a Cohabitee?

Yes, structurally a FLIT can be set up for a cohabitee, but the reasoning behind it changes.

For a married couple, the main draw of a FLIT is inheritance tax efficiency: income to the life tenant is treated as a gift, so it doesn’t create a tax charge and doesn’t erode the deceased partner’s allowance.

For a cohabitee, the FLIT doesn’t carry that same tax advantage because:

• There’s no spouse exemption to preserve in the first place.
• The surviving partner is treated as owning the trust assets for IHT purposes in many structures, meaning the value can still form part of their estate on death.
• Professional structuring is essential to determine exactly how the trust will be assessed for tax, as the outcome depends heavily on its drafting.

What a FLIT can still do for unmarried couples is provide:

• Security of tenure your partner can stay in the home for life without owning it outright.
• Protection for your children – especially useful in blended families, where you want your partner cared for but your own children to eventually inherit.
• Control over the capital – trustees decide how and when funds are released, rather than your partner having unrestricted access.

How Would a FLIT Work in Practice for an Unmarried Partner?

Take a hypothetical example: David and Sarah have lived together for 15 years but never married. David has two adult children from a previous relationship. He wants Sarah to stay in the family home for the rest of her life, but wants the property to eventually pass to his children.

A FLIT lets David:

1. Leave his share of the property into a trust on his death.
2. Give Sarah the right to live there rent-free (or receive income if it’s sold).
3. Ensure that on Sarah’s death, the property passes to his children, not to any new partner Sarah might have.

Without this structure, David’s share could pass under intestacy rules to his children immediately, leaving Sarah with no right to remain in the home. Or, if he simply left the property to Sarah outright, there’d be no guarantee it would ever reach his children.

What Are the Limitations Cohabitees Should Know About?

Before setting up a FLIT as a cohabitee, it’s important to go in with realistic expectations. Some key limitations include:

• No spousal IHT exemption: Assets passing to your partner won’t automatically avoid tax the way they would for a married couple.
• Residence nil rate band restrictions: The RNRB applies when a home passes to direct descendants; how a trust structure interacts with this needs careful drafting to avoid losing the allowance altogether.
• Complexity and cost: Because the tax treatment is less generous, it’s worth weighing whether a FLIT is the right tool compared with simpler alternatives such as a Protective Property Trust.
• No automatic legal recognition: Unlike a spouse, a cohabitee has no automatic inheritance rights, so the will and trust need to be watertight from the outset.

Can a FLIT Be Converted Into Another Type of Trust?

Yes. If circumstances change, for example your partner remarries, your children’s needs change, or the tax rules shift, a FLIT can often be converted into a different trust structure, such as a Nil Rate Band Discretionary Trust. Trustees may be given discretion to reduce or adjust the life tenant’s entitlement if circumstances warrant it. This flexibility is one of the reasons a well-drafted FLIT remains useful even outside the traditional married-couple scenario.

Is a FLIT the Right Choice for Cohabiting Couples?

For many unmarried couples, particularly those with children from previous relationships, an FLIT can strike a sensible balance: your partner is provided for during their lifetime, and your children will eventually inherit. But because the inheritance tax purposes and reliefs available to married couples don’t apply, this needs to sit within a wider estate plan rather than standing alone.

Depending on your circumstances, it may also be worth considering:

• A Protective Property Trust for a simpler way to ring-fence your share of the home.
• Inheritance tax planning advice to understand your exposure as an unmarried couple.
• A properly drafted will that explicitly names your partner, since cohabitees have no automatic right to inherit.

Getting the Right Advice

A Flexible Life Interest Trust can work for a cohabitee, but it needs to be tailored to your specific circumstances rather than copied from a template designed for married couples. The right structure depends on the value of your estate, whether you have children from previous relationships, and how much control you want trustees to have.

At Paradigm Wills and Legal Services, our advisors take the time to understand your family situation before recommending a trust or will structure, whether that’s a FLIT, a Protective Property Trust, or a combination of tools. Contacting us for a no-obligation consultation is free, whether in person, remotely, or via a home visit. Call our Leicester office on 0116 464 7055 or our London office on 0208 194 7189, or get in touch here to talk through your options.