Property Trust

What it is

A trust that deals with one property rather than the whole estate. It sets out who is allowed to live there, on what terms, for how long, and who receives the property when that comes to an end.

It is often used for a partner who is not your children’s parent, for an adult child living in a family property, or for a second home that several people have an interest in.

How it works

• The deed says who may occupy, whether they may be replaced, and what happens if they move out, remarry or need care.
• It records who pays the mortgage, the insurance, the council tax and the repairs, which is where most family arguments actually start.
• The trustees are normally given power to sell and buy a replacement, so the arrangement can move with the family.
• The remainder beneficiaries are named, so there is no question later about who takes the property.

Where specialist advice matters

• All jointly owned land in England and Wales is already held on a trust of land. Once the legal owners and the beneficial owners stop matching, that trust usually has to be registered with HMRC. This catches people constantly, particularly where legal title passes automatically to a survivor while the beneficial share passes under a Will to somebody else.
• Whether the residence nil rate band survives depends entirely on the terms. A right to occupy given to a lineal descendant can qualify. A gift contingent on reaching a particular age will not.
• If there is a mortgage on the property, how it is to be discharged has to be dealt with expressly, or the outcome may not be the one you assumed.
• Occupation rights and care fee assessments interact, and no arrangement guarantees a funding outcome.