Property protection trust

A property protection trust — also called a protective property trust or a family home trust — is a will trust in which a person leaves their share of a jointly owned property to trustees rather than outright to the surviving co-owner. The survivor can usually continue to live there, and on their death the first person's share passes to the beneficiaries they chose.

What it is trying to solve#

A couple own a house jointly and each leaves everything to the other, then to the children. It works until something changes after the first death: the survivor remarries, makes a new will, or the whole house is assessed for care fees.

By leaving only a share into trust, the first to die keeps control of that share's destination.

It does not work without severance#

This is the single most important practical point and the most commonly missed.

Property held as joint tenants passes automatically to the survivor by survivorship, regardless of what the will says. A property protection trust over a joint tenancy is a trust over nothing.

The ownership must first be converted to a tenancy in common by severance of joint tenancy, with a notice served and a Form A restriction registered at the Land Registry. A trust drafted without the severance registered is the classic failure in this area.

On care fees — be careful what is claimed#

These trusts are frequently marketed as protecting the home from care fees. The position is more nuanced than the marketing.

Leaving a share in trust on death may mean only the survivor's share is assessed when they are later assessed. But a local authority can apply deliberate deprivation of assets rules where it concludes assets were disposed of to avoid charges, and the timing and intention matter.

Anyone promising a guaranteed care fee outcome is overstating it. Advise on what the trust does, not on what a client hopes it does.

Related#

Severance of joint tenancy · Life interest trust · Trust drafting software