Asset Protection Will Trust UK (2026): Can a Will Trust Protect Your Estate from Care Home Fees?

An asset protection will trust (sometimes marketed as a 'bloodline trust', 'property protection trust', or 'family protection trust') is a trust created in a will that takes effect on the first death of a couple. The most common structure is a life interest trust over the deceased spouse's share of the family home: (1) THE BASIC STRUCTURE — LIFE INTEREST TRUST: when the first spouse dies, instead of leaving their share of the house outright to the surviving spouse, they leave it on trust. The trust gives the surviving spouse a life interest — the right to live in the property and receive any income from it — for the rest of their life. When the surviving spouse dies, the trust property (the first spouse's share of the home) passes to the children or other named beneficiaries. The surviving spouse never 'owns' the deceased's share — they have only the right to benefit from it for life; (2) THE KEY REQUIREMENT — TENANTS IN COMMON: for this trust to work, the couple must own the property as TENANTS IN COMMON (not as joint tenants). Joint tenants automatically pass ownership to the survivor on death (right of survivorship — the will is overridden). Tenants in common each own a defined share (typically 50:50) which can be left by will. If the couple currently own as joint tenants, a solicitor must sever the joint tenancy and register the tenants in common ownership with HM Land Registry before the first death; (3) THE PURPOSE: the main uses of an asset protection will trust are: (a) PROTECTING CHILDREN FROM A SECOND MARRIAGE: if the surviving spouse remarries, the new spouse might claim against the estate; with an asset protection trust, the deceased's share is locked away in trust and cannot be redirected by the survivor; (b) PROTECTING THE CHILDREN'S INHERITANCE FROM CARE HOME FEES: if the surviving spouse later needs residential care, only the assets they own are assessed for care home fees. They do not 'own' the first spouse's share — it is held in trust. This means that share should not be included in the means test; (c) BLOODLINE PROTECTION: keeping the deceased's share of the property in the family bloodline, passing to children and grandchildren rather than to a new partner; (4) THE DISCRETIONARY WILL TRUST VARIANT: some asset protection will trusts are fully discretionary rather than life interest — the trustees can decide whether (and how much) to benefit the surviving spouse. This offers more flexibility but is more complex to administer and does not qualify for the IHT spousal exemption in the same way.

The care home fee protection claim is the most commonly marketed benefit — and it is often overstated. The position is more nuanced: (1) WHAT THE MEANS TEST ASSESSES — CARE ACT 2014 AND CHARGING REGS 2014: local authorities assess a resident's capital to determine how much they must contribute to care home fees. The capital limit for full public funding is £23,250 (England — figure correct at 2026; devolved nations differ). The assessment includes the value of assets the resident owns, including their beneficial interest in property; (2) WHAT AN ASSET PROTECTION WILL TRUST DOES: if the first spouse to die left their share (say, 50%) of the home in a life interest trust for the survivor, the survivor does not own that 50% — they have a life interest in it. In theory, on means testing, the survivor's capital should include: (a) their own 50% share of the property; (b) NOT the 50% held in the life interest trust (because they don't own it). This can be a real saving — halving the property value included in the capital assessment; (3) THE DISREGARDS — WHEN THE PROPERTY IS EXCLUDED FROM THE MEANS TEST: the property (or the survivor's own share) is disregarded from the means test entirely while: (a) the survivor is living in it as their sole or main home (the 'property occupied as a home' disregard lasts for up to 12 weeks at the start of permanent care); (b) for the first 12 weeks of permanent residential care — the '12-week property disregard'; (c) if a qualifying dependent relative (e.g. an elderly relative, a disabled child) is living in the property — for as long as they continue to live there. After 12 weeks of permanent care, the survivor's own 50% share IS included in the means test; (4) THE BENEFICIAL INTEREST IN THE LIFE INTEREST TRUST: although the survivor does not own the 50% in trust, they have a beneficial life interest — the right to occupy and benefit from it. The local authority's approach to life interests in property is not straightforward: the Care and Support (Charging and Assessment of Resources) Regulations 2014 (SI 2014/2672) provide that the value of a life interest in land is included in the capital assessment, but its value is uncertain and may be low (particularly for an elderly person). The local authority may seek to place a value on the life interest and include it in the assessment; (5) THE HONEST ANSWER: an asset protection will trust can protect the first spouse's share from care home fees in many cases — particularly where the local authority accepts that the life interest has low or nil capital value. However, it is not a guaranteed protection, and local authorities increasingly scrutinise these arrangements.

The trusts are often marketed as providing more certainty than they actually give. Understanding the limitations is essential: (1) DELIBERATE DEPRIVATION RISK — CARE ACT 2014 s.70-71: local authorities have power to treat a person as having deprived themselves of capital intentionally if the main purpose of a transfer or disposal was to avoid paying for care. However, this rule typically applies to LIFETIME transfers — for example, giving away the family home or cash while alive specifically to reduce the care assessment. Will trusts created on first death are different: the trust takes effect at death (when the deceased can no longer anticipate needing care), so deliberate deprivation is harder to argue. However, if the surviving spouse later creates an asset protection trust of their own share (a lifetime transfer), the deliberate deprivation rules apply with full force; (2) THE SECOND DEATH — DOES THE TRUST PROTECT THE CHILDREN?: an asset protection will trust protects the first deceased's share and passes it to the children on the second death. The surviving spouse's own 50% share is fully part of their estate and will be included in their care home assessment. The trust only protects half (or whatever the first deceased's share was). If the surviving spouse outlives their savings, even the protected share may eventually be used for care (through the life interest value) or subject to local authority scrutiny; (3) ADMINISTRATION BURDEN — TLATA 1996: a life interest trust over property is a trust of land under the Trusts of Land and Appointment of Trustees Act 1996. The trustees (who may be the children) have duties to both the life tenant (survivor) and the remaindermen (children). They must: (a) keep trust accounts and records; (b) obtain insurance; (c) agree on maintenance responsibilities; (d) manage the property appropriately. If the survivor wants to sell and move, the trustees must agree and deal with the sale proceeds (which remain in the trust, usually invested for the survivor's benefit); (4) IHT — POSITION OF THE LIFE INTEREST TRUST: a life interest (IPDI) created in a will qualifies for the spousal exemption under IHTA 1984 s.49 if the surviving spouse is the life tenant. This means the value passes exempt from IHT on the first death. On the second death, the trust property is included in the surviving spouse's estate for IHT; (5) PROFESSIONAL TRUSTEE COSTS: if professional trustees are appointed, their annual fees can be significant. Using children as trustees avoids this but creates potential family conflict if the children and the surviving spouse disagree about the property.

There are three main approaches to the family home in a will, each with different implications: (1) OUTRIGHT TO SURVIVING SPOUSE: the deceased leaves their share of the home outright to the survivor. The survivor then owns 100% of the property. Result: (a) simple and certain; (b) surviving spouse has full control; (c) survivor's entire estate (including the home) is included in the care home means test; (d) survivor can redirect the asset to a new partner, new family, or charity by will or during lifetime; (e) no ongoing trust administration costs; (2) LIFE INTEREST TRUST (IPDI): the deceased's share is left in a life interest trust for the survivor. The survivor has the right to live in the property and benefit from it for life — but does not own the share. Result: (a) the deceased's share is protected for the children; (b) IHT spousal exemption applies (IHTA 1984 s.49 — IPDI); (c) the deceased's share is potentially protected from the survivor's care home means test (though not guaranteed); (d) the survivor cannot redirect the deceased's share by will; (e) if the survivor sells and moves, the trust follows the proceeds — requiring ongoing trustee involvement; (f) requires tenants in common ownership; (3) FULLY DISCRETIONARY TRUST: the deceased's estate passes into a discretionary trust in which the surviving spouse and children are all potential beneficiaries. Result: (a) maximum flexibility for the trustees; (b) does NOT qualify for the IHT spousal exemption unless structured as a QIIP; (c) a chargeable transfer to the trust may arise on the first death (subject to NRB); (d) 10-year periodic charges and exit charges apply; (e) the trust property is outside both estates for care home means testing (subject to deliberate deprivation risk in some cases); (f) complex ongoing administration; (4) RECOMMENDATION FOR MOST FAMILIES: for most couples, the IPDI life interest trust over the family home (on first death) provides the best balance of protection, simplicity, and IHT efficiency. The fully discretionary trust is better suited to larger estates where IHT planning around the NRB is a primary concern and where the complexities of 10-year charges are worth accepting.

Setting up an asset protection will trust involves several coordinated steps: (1) CONVERT THE PROPERTY OWNERSHIP TO TENANTS IN COMMON: if the couple currently own the property as joint tenants, they must sever the joint tenancy. This is done by: (a) one party serving a written notice of severance on the other (no court order required); (b) lodging a Form SEV (Notice of Severance — restriction on title) at HM Land Registry. Without this step, the property passes automatically to the survivor on first death and the will cannot deal with the deceased's share; (2) DRAFT THE WILLS: both parties should make new wills (or amend existing wills with a codicil) to include the asset protection trust provisions. The will should: (a) specifically deal with the deceased's share of the named property; (b) create the life interest trust with the surviving spouse as life tenant; (c) name trustees (typically the children or a combination of children and a professional trustee); (d) set out what happens on the termination of the life interest (death of survivor) — typically to the children in equal shares; (e) deal with what happens if the property is sold (trust follows proceeds); (3) CONSIDER THE REST OF THE ESTATE: the asset protection trust typically applies only to the share of the family home — not the entire estate. The rest of the estate (savings, investments, other property) may pass outright to the survivor or in a different manner. The wills should address both the trust property and the non-trust estate; (4) REGISTER THE TRUST: under the HMRC Trust Registration Service (TRS), most express trusts created in wills must be registered within 90 days of the trust coming into existence (i.e. within 90 days of the testator's death). The trustees are responsible for registration; (5) REVIEW REGULARLY: the trust provisions should be reviewed whenever: (a) the property is sold or significantly altered; (b) the couple's financial circumstances change materially; (c) the law changes (care home fee regulations, IHT rules, TRS requirements); (d) one party remarries or separates.