Trusts · 10 min read · Published · Updated
Protecting your family home: life interest trusts and property protection trusts explained
How life interest trusts and property protection trusts work, and what they can and cannot protect. It also helps you decide whether one is right for you.
By Aaron Johnson, Consultant Solicitor and TEP, a solicitor in Bridlington who writes every guide himself.
This guide is general information about the law of England and Wales, not legal advice. Each case is assessed on its own merits.
Guides · Trusts · No. 11 of 12Reviewed · 10 minutes
Why people worry
For most people, the home is their most valuable asset and the most important thing they will leave behind. You may want it to reach your children, not a new partner, creditors or care home fees. That is one of the most common reasons for estate planning.
The worry is sharpest for couples in a second or later marriage. It is sharp too for anyone who fears the surviving partner may remarry. Families thinking about care home costs feel it as well.
How property is normally held
Before considering a trust, you need to know how your property is owned. In England and Wales, jointly owned property is held in one of two ways:
Joint tenancy. When one owner dies, their share passes automatically to the surviving owner. It does not pass under the will and cannot be put into a trust on death.
Tenancy in common. Each owner holds a defined share. On death, that share passes under the will and can be put into a trust. This is the form of ownership you need if you want a trust to protect your share.
If you own as joint tenants, you will probably need to "sever" the joint tenancy as part of the planning. This is a simple step, but it must be done correctly.
The life interest trust
A life interest trust is the most common way of protecting the family home. On the first death, that person's share of the property passes into a trust. The surviving partner is the "life tenant" and has the right to live in the property for the rest of their life. When the surviving partner dies, the trust assets pass to the final beneficiaries, usually the children.
This does several things at once. The surviving partner is secure in the home for life. The first partner's share is protected against remarriage and other risks. The survivor's own will cannot redirect the trust share, although the trustees may have power to use capital for the survivor. For married couples and civil partners, the spouse exemption still applies on the first death. The trust share then counts as part of the survivor's estate when they die. So the trust is usually neutral for inheritance tax. Unmarried partners do not get the spouse exemption, so tax may be due on the first death.
In this part
Property protection trusts
"Property protection trust" is a marketing term, not a legal category. It usually means a life interest trust over the family home, set up in a will. Sometimes it means a discretionary trust, which gives the trustees wider powers. It is taxed differently: it can lose the spouse exemption and the residence nil rate band, and can face ten-yearly charges.
Life Interest Trust vs Property Protection Trust
| Life Interest Trust | Property Protection Trust |
|---|---|
| The surviving partner has the right to live in the property | Wider protection than the home alone |
| The property passes to chosen beneficiaries on the second death | Can protect against a beneficiary's creditors or divorce |
| Protects against sideways disinheritance (assets passing to a new partner's family) | In a will, may keep the first partner's share out of the survivor's care fees assessment. A lifetime transfer can be treated as deprivation of assets |
| Created in a will and takes effect on death | Can be created in a will or during your lifetime |
| Commonly used by married couples | Often used alongside a life interest trust |
Where does your half of the home go?
A will trust for a blended family, shown one step at a time.
Care home fees
This is the most sensitive and most misunderstood area of estate planning. A local authority can treat a transfer of assets into a trust as "deliberate deprivation of assets" if it was done to avoid care fees. If so, the authority can assess your finances as though the transfer had never happened.
That does not mean trusts are never appropriate. But the authority does not have to show that avoiding care fees was the main reason. A significant reason is enough. There is no fixed time limit on how far back it can look. The seven-year inheritance tax rule does not apply to care fees. A trust set up years before any care is needed, for clear estate planning reasons, stands in a much stronger position.
In this part
Practical considerations
If you are considering a property protection trust, bear in mind: the mortgage (the lender may need to consent), stamp duty (a transfer can trigger stamp duty land tax if there is mortgage debt), trust administration (including registration with HMRC), flexibility (can the surviving partner downsize?) and, for a lifetime trust, inheritance tax. If you move your home into a lifetime trust and keep living there rent-free, it usually still counts in your estate. A transfer into most lifetime trusts can also be taxed at 20% at once on value above your available nil rate band.
Getting it right
Aaron takes a balanced and open approach. He will discuss your options frankly and explain what a trust can and cannot do. He will only recommend one if it is genuinely in your interests.
This guide is general information, not legal advice.
Sources
The official pages behind the rules this guide explains. Each was checked on .
Written by Aaron Johnson, Consultant Solicitor and TEP · Law of England and Wales as at 20 March 2026 · Ends
