Life Interest Trust

A life interest trust in Mauritius splits one set of assets between two groups of people. One person, often a spouse, receives the income or the use of the assets for the rest of their life. Other people, often the children, are entitled to the capital once that life interest ends. The trustee holds the assets throughout and applies the terms of the trust deed.

For couples with children from different relationships, or with a family home and a portfolio they want to keep within the bloodline, this split is the main attraction. This page covers how the structure is built, the roles involved, the tax position and the questions to settle before a deed is drafted.

What a life interest trust does

The structure rests on two interests held at the same time.

• The life interest. The life tenant (the spouse, in most family cases) is entitled to the income of the trust fund, or to occupy or use a particular asset, for life.
• The remainder interest. The remainder beneficiaries (typically children or grandchildren) are entitled to the capital when the life interest ends, usually on the death of the life tenant.

The trustee is the legal owner of the assets under the Trusts Act 2001 framework. Neither the life tenant nor the remainder beneficiaries own the assets outright. That separation is what allows the capital to be preserved while the spouse is provided for.

A simple example

A widower in his sixties owns a house and an investment portfolio and has two children from a first marriage. He remarries. He wants his new spouse to live in the house and receive the portfolio income for life, yet he wants the house and the portfolio to reach his children afterwards. A life interest trust is designed for exactly this arrangement. Without it, an outright gift to the spouse leaves the later destination of the assets in the spouse's hands.

How the structure is organised

Trust for a surviving spouse in Mauritius

The search for a trust for surviving spouse arrangements in Mauritius usually starts from one worry: what happens to the spouse after the first death. A life interest trust answers that worry without handing over the capital.

Two routes exist in practice.

1. A lifetime trust. The settlor creates and funds the trust while alive. The spouse may benefit straight away or only from the settlor's death.
2. A trust that takes effect on death. The terms are set out so that the life interest starts when the settlor dies. The two routes differ in timing and in what happens to the trust when the settlor dies.

Under the Trusts Act 2001, a trust is presumed irrevocable by the settlor unless the deed expressly provides for revocation (article 11). A life interest trust is normally drafted as irrevocable, because the point is to fix the remainder for the next generation. Article 8 also provides that the settlor may be a trustee, beneficiary, protector or enforcer, but cannot be the sole beneficiary of the trust they create.

The people involved

Trustees

Under article 2 of the Trusts Act 2001, a "qualified trustee" is a corporate service provider holding a Management Licence from the FSC, or another person resident in Mauritius authorised by the FSC to provide trustee services. Article 28 limits a trust to 4 trustees at most, including at least one qualified trustee at all times. The trust does not become invalid or lapse merely because a trustee or qualified trustee is missing.

A life interest trust puts the trustee in a delicate position, because the life tenant and the remainder beneficiaries want different things. The life tenant wants a high income; the children want the capital to grow. The trustee has to treat both fairly. The page on duties of a trustee toward the family sets out what that balance requires.

The protector

A protector under article 24 of the Trusts Act 2001 may be an adult, including the settlor, or a legal person. Unless the deed says otherwise, the protector can remove and appoint trustees, set the governing law of the trust, change the place of administration and withhold consent to certain acts, without becoming a trustee. In a family where the spouse and the children may disagree, a protector can act as a check. The trust protector page explains the powers in more detail.

Drafting choices that matter

The deed has to answer questions that the label "life interest" does not settle. These are the most common.

Income only, or capital access too?

A pure life interest gives the spouse income and nothing else. Many families add a limited power for the trustee to advance capital to the spouse in defined circumstances, such as illness or a change in housing needs. The more generous that power, the less certain the remainder becomes. The deed should state the test the trustee applies.

Use of a home

Where the main asset is the family home, the deed can give the spouse a right to live in it, to the exclusion of any right to sell it. It should also say who pays for maintenance and insurance, and what happens if the spouse wishes to move. If the trustee may sell and buy a smaller home, the deed should say so.

Remarriage and cohabitation

Some settlors want the life interest to end, or to be reduced, if the spouse remarries. Others do not. This is a personal and legal choice to be made deliberately, because a clause that ends the interest on a future event needs to be precise enough for a trustee to apply it.

Discretion

A life interest can be fixed, or the trustee can be given discretion over how much income goes to the spouse and how much is retained. A fixed entitlement gives certainty; discretion gives flexibility. The discretionary trust page explains that alternative.

The letter of wishes

A non-binding letter of wishes can guide the trustee on matters that are hard to put in a deed, such as how generously to treat requests from the spouse. It does not bind the trustee but it is a useful tool for explaining the settlor's intentions.

Life interest trust and forced heirship

Mauritian succession law reserves part of an estate for certain heirs, and this interacts with any plan to leave assets in trust. The page on forced heirship and trusts explains the framework. Whether a transfer into a life interest trust can be challenged by a reserved heir depends on the facts, including when and how the transfer was made and the law that applies. This is an area where individual legal advice is necessary before any asset is transferred.

For the spouse's own position on a death, see surviving spouse inheritance rights. For a comparison with a right of use held directly rather than through a trustee, see the page on trust or usufruct.

Protecting the life interest and the remainder

Article 18 of the Trusts Act 2001 recognises protective, or spendthrift, trusts. The interest of a beneficiary can be made subject to termination, restriction on alienation or suspension if the beneficiary becomes insolvent or their assets are seized. A settlor who is concerned that the life tenant's creditors, or a later claim against the spouse, could reach the income can ask for a clause of this kind. Whether it works in a given case depends on the drafting and the facts.

Duration and accumulation

Article 9 of the Trusts Act 2001 sets the maximum duration of a trust other than a purpose trust at 99 years from its creation, unless it ends earlier. A life interest rarely tests that limit, because it ends on the life tenant's death, but the remainder may be held for grandchildren for a long time afterwards. Article 10 allows income to be accumulated for the whole maximum duration, but not beyond 25 years where the trust holds immovable property situated in Mauritius. This matters if the trustee is allowed to retain part of the income rather than pay it to the spouse.

Tax points to check

Tax depends on the residence of the people and the type of assets. The following general points come from the Income Tax Act 1995, as consolidated up to the Finance Act 2026.

• A trust is taxable on its taxable income at the Part IV rate of the First Schedule, which is 15%.
• Under article 46(4), any distribution to a trust beneficiary is deemed to be a dividend for that beneficiary.
• The exemption for a non-resident trust on filing a non-residence declaration was repealed by the Finance Act 2021, deemed effective from 1 July 2021. It no longer exists in the version consolidated up to the Finance Act 2026.

For a life interest trust, the practical question is how income paid to the life tenant is treated in their hands, and in which country. That depends on where the spouse is resident, so it should be checked with a tax adviser before the deed is signed. See how trusts are taxed in Mauritius for the framework.

Record keeping and reporting

A trustee must keep accounts and records up to date, together with an alphabetical register of the names and last known addresses of each beneficiary and settlor (article 38(3) of the Trusts Act 2001). Accounting records are kept for at least 5 years after completion of the operations they relate to.

A qualified trustee must also provide the FSC with the information needed to keep the register of trusts under article 26A of the Financial Services Act 2007. Article 33 of the Trusts Act 2001 requires the trustee to keep information about the trust confidential, and the court orders disclosure only on the application of an investigating authority where the information is required in good faith for an investigation or proceedings relating to a financial crime.

Before you set one up

• Decide who the life tenant is and whether the interest is income only, use only, or both
• Name the remainder beneficiaries, and what happens if one of them dies first
• Decide whether the trustee may advance capital to the life tenant
• Choose a qualified trustee and consider a protector
• Check the effect on reserved heirs with a lawyer
• Confirm the tax position in each country involved

A life interest trust is a flexible tool, but it ties several people together for a long time. If you want to discuss whether it fits your family, you can send a request through the contact form, which is passed to an FSC-licensed corporate service provider (Management Licence).