As care home costs continue to rise, many UK homeowners worry about losing their property to fund long-term care. In 2025, the average weekly cost of residential care is £760 - £1,400, and nursing homes can exceed £1,600, according to Carehome.co.uk. Without proper planning, your home could be sold to cover these fees, reducing the inheritance you leave for loved ones. This guide explains legal and ethical ways to protect your property from care home fees, including trusts, ownership changes, and financial planning options. Written by our expert estate planning team at Wills Services, this comprehensive resource Will help you safeguard your assets while complying with UK regulations.
Understanding care home fees and your property
When you enter long-term residential care, your local authority conducts a financial assessment (means test) to determine how much you must contribute to care costs. In England, if your assets (including your property, savings, and investments) exceed £23,250 (as of 2025), you are considered a “self-funder” and must pay care fees in full. In Wales, the threshold is £50,000; in Scotland, £35,000; and in Northern Ireland, £23,250.
Your property is included in this assessment unless:
- Your spouse, civil partner, or a dependent child under 18 lives in the home.
- A relative over 60 or an incapacitated relative resides there.
- You are only in care temporarily.
Without exemptions, the local authority may require you to sell your home or use its value (via equity release or deferred payment schemes) to cover fees. However, with proactive estate planning, you can protect your property and preserve your legacy.
Key strategies to protect your property from care home fees
Here are the most effective, legal methods to safeguard your home, each explained in detail to help you make informed decisions. Always consult a qualified solicitor or financial advisor to ensure compliance with UK laws and to tailor solutions to your circumstances.
1. Set up a protective property trust (Will Trust)
A Protective Property Trust is one of the most effective ways to protect your home from care home fees, especially for couples. This trust is created through your Will and activates after the first partner’s death, ring-fencing their share of the property for beneficiaries (e.g., children) while allowing the surviving partner to continue living in the home.
How it works
- Change property ownership - If you own your home as “joint tenants,” the property automatically passes to the surviving partner upon death, making it fully assessable for care fees. By changing to “tenants in common,” each partner owns a distinct share (typically 50/50).
- Create a Will Trust - In your Will, specify that your share of the property goes into a trust upon your death. The trust holds your share for your chosen beneficiaries, but the surviving partner retains a “life interest,” meaning they can live in the home rent-free for life.
- Care fee protection - If the surviving partner enters care, only their share of the property (e.g., 50%) is assessed. The trust’s share is protected, as it never becomes part of the survivor’s estate.
Example
John and Sarah own a £300,000 home as tenants in common. They set up a Protective Property Trust in their Wills. When John dies, his 50% share (£150,000) goes into the trust for their children, while Sarah continues living in the home. If Sarah later enters care, only her £150,000 share is assessed, preserving the trust’s portion for their children.
Benefits
- Protects up to half the property’s value.
- The surviving partner can remain in the home or sell it to downsize, with the trust’s share reinvested.
- Simple to set up with professional legal advice.
Considerations
- You must own the property as tenants in common, which may require a legal change if you’re currently joint tenants.
- The trust must have legitimate purposes beyond avoiding care fees to avoid being challenged as “deliberate deprivation of assets.”
- Seek advice from a solicitor to ensure the trust is correctly worded and registered with HMRC’s Trust Registration Service.
Why it works
Protective Property Trusts are widely recognised as a legitimate estate planning tool, reducing the assessable value of your estate while ensuring your spouse’s security.
2. Change to Tenants in Common Ownership
For couples, owning your home as tenants in common is a critical step in protecting your property. Unlike joint tenancy, where the property automatically passes to the surviving partner, tenants in common allows each partner to control their share through their Will.
Steps to change ownership
- Check your current ownership status via your property’s title deeds or Land Registry.
- If you’re joint tenants, instruct a solicitor to “sever” the tenancy, converting it to tenants in common.
- Update your Wills to specify how your share should be handled (e.g., placed in a trust).
Why it matters
By owning distinct shares, you can direct your portion into a trust or to beneficiaries, reducing the surviving partner’s assessable assets. This is a prerequisite for Protective Property Trusts and other will-based strategies.
3. Consider a Life Interest Trust
A Life Interest Trust is similar to a Protective Property Trust but offers flexibility for income generation. This trust allows the surviving partner to benefit from the deceased’s share (e.g., receiving rental income if the property is let) while protecting the capital for beneficiaries.
Key features
- The deceased’s share is held in trust, with the surviving partner as a beneficiary for income or use.
- Upon the surviving partner’s death, the trust’s assets pass to the ultimate beneficiaries (e.g., children).
- Only the surviving partner’s share is assessed for care fees.
When to use it
This option suits couples who may want to generate income from the property (e.g., by renting it out) while protecting the underlying value. It’s also useful for blended families, ensuring each partner’s children inherit their share.
4. Explore Lifetime Trusts (Asset Protection Trusts)
A Lifetime Trust (or Asset Protection Trust) involves transferring your property into a trust during your lifetime, rather than through a Will. This can protect the property from care fee assessments, but it’s complex and requires careful planning.
How it works
- You transfer legal ownership of your home to the trust, appointing trustees (often family members or professionals) to manage it.
- You retain a right to live in the property rent-free or receive income, depending on the trust’s terms.
- The property is no longer part of your estate, so it’s typically excluded from care fee assessments.
Risks and considerations
- Deliberate deprivation of assets - If the local authority believes the trust was set up solely to avoid care fees, they may treat the property as still yours, a practice known as “notional capital.” There’s no time limit on how far back authorities can look.
- Tax implications - Transferring a property into a trust may trigger capital gains tax or inheritance tax, especially if you continue living in the home (a “gift with reservation of benefit”).
- Costs - Lifetime trusts are expensive to set up and maintain, with legal fees often in the thousands.
- Loss of control - You no longer own the property, and trustees make decisions, which may limit your flexibility.
When to use it
Lifetime trusts are best for individuals with significant assets, complex family dynamics, or other estate planning goals (e.g., avoiding probate or protecting against bankruptcy). Always consult a specialist solicitor to ensure compliance and avoid legal challenges.
5. Financial planning options
In addition to trusts, several financial strategies can help you fund care without selling your home:
Care annuity
A care annuity is an insurance product that pays a fixed income to cover care costs for life. You pay a lump sum upfront, and the annuity covers fees, reducing the need to sell your property.
- Pros: Provides certainty and preserves your home.
- Cons: High upfront cost; may not be cost-effective if care needs are short-term.
- Example: A £80,000 annuity might provide £20,000 annually for care, regardless of how long you need it.
Deferred payment agreements
Offered by local authorities, a deferred payment agreement allows you to delay selling your home to pay care fees. The council covers costs upfront, and you repay them (with interest) when the property is sold or after your death.
- Pros: Keeps your home intact during your lifetime.
- Cons: Interest accrues, and the debt must eventually be settled.
Equity release
Equity release lets you access your home’s value as a lump sum or income to pay care fees, without selling the property. A lifetime mortgage is the most common form.
- Pros: Immediate funds without moving out.
- Cons: Interest compounds over time, reducing your estate’s value. Always seek independent financial advice.
Rental income
If you move into care, consider renting out your property to generate income for fees. This can delay or avoid selling the home.
- Pros: Retains property ownership and provides steady income.
- Cons: Rental income may not cover high care costs, and it’s assessable in means tests.
6. Avoid deliberate deprivation of assets
Attempting to avoid care fees by gifting your property or transferring it to family can backfire. Local authorities can classify this as deliberate deprivation of assets if they believe your primary motive was to reduce assessable assets. Consequences include:
- The gifted property’s value being included in your means test as “notional capital.”
- Legal action to recover care costs from the recipient.
- No time limit on how far back authorities can investigate (unlike the 7-year rule for inheritance tax).
To avoid issues:
- Plan well in advance (ideally years before care is needed).
- Demonstrate legitimate reasons for transfers, such as estate planning or inheritance goals.
- Work with a solicitor to ensure compliance with regulations.
Why early planning is critical
The sooner you plan, the more options you have to protect your property. Last-minute actions, such as transferring assets within six months of entering care, are likely to be scrutinised and reversed. Early planning also:
- Reduces the risk of deprivation of assets claims.
- Allows you to explore multiple strategies (trusts, annuities, etc.).
- Provides peace of mind for you and your family.
From October 2025, England Will introduce an £86,000 lifetime cap on care costs, after which the local authority covers fees. However, this cap excludes living costs (e.g., room and board), so your property may still be at risk. Proactive planning remains essential.
Common Myths About Protecting Your Property
Myth 1: Gifting my home to my children Will protect it
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Reality: Gifting is often seen as deliberate deprivation, and the property’s value may still be assessed. It also risks loss if the recipient faces bankruptcy, divorce, or death.
Myth 2: The 7-year rule applies to care fees
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Reality: Unlike inheritance tax, there’s no 7-year safe period for care fee assessments. Authorities can look back indefinitely.
Myth 3: Trusts are a guaranteed way to avoid fees
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Reality: Trusts must be set up correctly and for legitimate reasons. Improper trusts can be challenged or trigger tax issues.
How Wills Services can help
At Wills Services, our experienced estate planning solicitors specialise in protecting your assets from care home fees. We offer:
- Personalised advice - Tailored strategies based on your financial situation and family needs.
- Trust setup - Expert guidance on creating Protective Property Trusts, Life Interest Trusts, or Lifetime Trusts.
- Ownership changes - Assistance with converting to tenants in common.
- Compliance - Ensuring all plans meet UK legal and tax requirements.
Frequently Asked Questions (FAQs)
Q: Can I protect my home if I’m single?
A: Yes, but options are limited. Lifetime trusts or financial products like annuities may help, but they require careful planning to avoid deprivation of assets claims. Consult a solicitor for personalised advice.
Q: How much does a Protective Property Trust cost?
A: Costs vary but typically range from £500 - £2,000, depending on complexity and legal fees. Contact us for a quote.
Q: Will my property be safe if my spouse still lives there?
A: Yes, if your spouse or civil partner lives in the home, it’s exempt from the means test while they reside there.
Q: What happens if I sell my home after setting up a trust?
A: The trust’s share can be reinvested (e.g., into a new property or savings), preserving its protected status. Your solicitor can advise on the process.
