Property Trusts & Care Home Fees: A Homeowner's Guide

If you go into long-term residential care in England, the local authority means-tests your assets. In 2026:

• Above £23,250 in assets — you pay your own fees in full
• Between £14,250 and £23,250 — you pay a tariff income
• Below £14,250 — your assets are disregarded

The home is included in the assessment — but only if it's owned solely by the person needing care. If a spouse is still living there, it's disregarded while they're alive.

The trap: when the first spouse dies and leaves their share outright to the survivor, the home becomes 100% the survivor's. If they later need care, the entire home value is on the table.

The mechanics:

1. You own the home as tenants in common, typically 50/50
2. Each will leaves your share into a Property Trust on death
3. The surviving spouse has a "life interest" — the right to live in the home for life
4. On the survivor's death, the ring-fenced share passes to your chosen beneficiaries (usually children)

The deceased's half is held by trustees, not the survivor — so it's not assessable for the survivor's care fees. Half the home is therefore protected.

Be clear on the limits:

• Doesn't protect the first spouse's care — only the survivor's. If you set up the trust then immediately need care, it offers no protection.
• Doesn't avoid Inheritance Tax automatically — see IHT for homeowners.
• Won't work if set up too late — local authorities can challenge transfers as "deliberate deprivation of assets". Trusts are far more robust than gifts but still need timing right.
• Doesn't downsize itself — if the survivor wants to move, the trustees must agree and the trust travels with the new property.

Property Trusts aren't only for care planning. They're also the standard solution for blended families: the surviving spouse keeps the home for life, then your share passes to your children — preventing sideways disinheritance.

Property Trusts must be drafted by a regulated specialist. The will, ownership change and trustee appointments all need to be done together to be effective.

Through our partnership with Castle Family Legal, we can introduce you to a regulated specialist who handles Property Trusts daily. We'll co-ordinate the protection side. Get in touch.