Property Protection Trust Will

What it is

A Will under which your share of the family home passes into a trust when you die, rather than outright to your partner. Your partner keeps the right to live there for the rest of their life. When that right ends, your share goes to the people you named, usually your own children.

How it works

• The property has to be held as tenants in common. Under a joint tenancy your share passes automatically to the survivor and never reaches your Will at all, so the trust would simply be empty.
• We sever the joint tenancy and apply for the restriction on the title at HM Land Registry. That work is part of the job, because without it the trust cannot operate.
• Each partner makes a Will leaving their share to the trust. The survivor takes an interest in possession, meaning the right to occupy and usually the right to any income.
• The trustees can normally allow the house to be sold and replaced, so nobody is trapped in a home that stops being suitable.
• For Inheritance Tax the survivor’s interest arises immediately on death, so the spouse exemption applies on the first death and the trust share forms part of the survivor’s estate on the second. It does not create a double charge, and it does not remove the value from the estate either.

What happens if you do nothing

If you leave everything outright to each other and the survivor later remarries, marriage cancels their Will. Their estate, including everything they inherited from you, can then pass under the intestacy rules to the new spouse. Children from an earlier relationship can end up with nothing, and there is no mechanism to undo it.

There is also a quieter risk. A court has already held a firm liable to a disappointed beneficiary for failing to check how a property was owned and failing to prepare a notice of severance, so that the share passed by survivorship instead of under the Will. A notice of severance cannot be given by Will. It has to be served while both owners are alive.

Where specialist advice matters

• Care fees are why most people ask about this, and the position needs stating carefully. A share passing into trust on death is not a lifetime gift, so the deliberate deprivation rules that catch lifetime transfers are not engaged in the same way. A local authority still assesses the survivor on what they actually own and on their right to occupy, and no arrangement guarantees a funding outcome. Anyone who tells you a trust puts a house permanently beyond the reach of care fees is overselling it.
• The residence nil rate band depends on the home being closely inherited. How the trust is drafted decides whether that test is met, and getting it wrong can cost the allowance.
• If there is a mortgage, or the shares are unequal, the arithmetic has to be set out properly before anything is drafted.
• Choose trustees who will still be willing and able to act in twenty years, and who can work with your surviving partner.
• If you are not married, the structure works very differently. The spouse exemption is not available to you, and neither is step child status for the residence allowance. Say so early and we will look at it properly.