Does a Life Interest Trust avoid care home fees? | 2026

At a glance

What a Life Interest Trust is: A Life Interest Trust is a type of trust created through a will that allows a surviving partner to continue living in or benefiting from a property during their lifetime, while protecting the deceased partner’s share for chosen beneficiaries, such as children, after the survivor dies.

Remarriage protection: The trust can help ensure that the deceased partner’s share ultimately passes to intended beneficiaries, even if the surviving partner remarries.

Not a guaranteed solution: A Life Interest Trust can help protect part of a property for beneficiaries, but it does not guarantee that care home fees can be avoided, and local authorities may challenge arrangements designed primarily to reduce care costs.

Protects part of the home: When one partner dies, their share of the property can pass into the trust, protecting that portion for beneficiaries while allowing the surviving partner to continue living in the home.

Council care costs and inheritance

Care homes are expensive, with residential care costing on average £5,192 a month and nursing care costing even more at an average £6,140 a month.

Some people choose to sell their homes so they can pay for a care home that will suit their needs. Others want to keep their home as inheritance for their children, so opt to put it in a life interest trust to avoid care home fees.

However a Life Interest Trust is not a guaranteed way to reduce care home fees, and local authorities may challenge arrangements they believe were set up to avoid costs.

Family inheritance can be significantly reduced or wiped out if the council does use a person’s home to pay for their care home fees.

Should I put my home into a lifetime property trust?

Some people use a Life Interest Trust as part of their estate planning. While it may help protect part of a property’s value for beneficiaries, it does not guarantee that care home fees can be avoided.

They do this to safeguard their house for beneficiaries such as their children and keep their family inheritance intact. This is sometimes referred to as a Property Life Interest Trust.

Do I have to pay for a care home?

Currently around half of people living in care homes pay for their own care and are known as self-funders. The other half are paid for by their local authority and are referred to as state funders.

Whether you pay for your own care depends on how much income and capital you have.

The thresholds are:

• England

Lower limit: £14,250

Upper limit: £23,250

• Scotland

Lower limit: £21,500

Upper limit: £35,000

• Wales

One limit of £50,000

• Northern Ireland

Lower limit: £14,250

Upper limit: £23,250

People who have over the upper threshold limit will have to pay for all of their care. Those who have between the lower and upper limit will still have to contribute to their care.

If you are not sure whether you need to pay for your own care, you will need to get a care needs assessment and a financial assessment done by your local council.

Can I avoid care fees by putting my home into a trust?

A Life Interest Trust is a Trust that is set up through your will. To set up a Life Interest Trust you will need to own the property solely or own it as a couple as Tenants in Common.

A Life Interest Trust will ensure that if one half of a couple dies, the survivor will have a home for the rest of their life.

After the first death if the surviving partner needs to go into a care home, only the value of the property of the surviving partner can be used to pay for the care home. This will affect the kind of care home the surviving partner is able to afford.

The property share of the first person who has died is protected as they have left it to the Trust and it can be passed onto beneficiaries. These beneficiaries are known in legal terms as ‘remaindermen’.

The surviving partner cannot undo the Life Interest Trust once the first half of the couple has died.

What happens if the surviving partner remarries?

A benefit of having a Life Interest Trust is that if the surviving partner remarries after their partner has died, the share of the first partner would be protected for their children or other beneficiaries.

Deprivation of assets: When should you set up a trust?

A Life Interest Trust should be set up well in advance, as timing and intention are important when councils assess whether assets have been deliberately reduced. If you leave it too late you may be accused of deprivation of assets.

If you have set up the trust to avoid paying any care home fees, the local authority may well scrutinise the structure and look at when you set up the trust.

Your local authority may try and challenge the Trust under the Deprivation of Assets Rules.

What if I want to sell my house or downsize?

The Life Interest Trust can be devised so it is flexible. This will enable the surviving partner to sell the house at any time or downsize.

If they buy a smaller property, any money left over from the purchase needs to be split equally between the survivor and the Trust.

The Trustees will need to invest the money.

Any interest on that money needs to be paid to the survivor for the rest of their life.

How to set up a Life Interest Trust

Setting up a Life Interest Trust can be very complex. You will first need to make sure you both own the property as Tenants in Common. You will also need to understand the benefits and risks before you go ahead.

• You will need legal advice and you should choose a solicitor who is experienced in this area of law
• You will also need to appoint a trustee who is trustworthy and will be responsible for managing the Trust. A trustee can be family, a friend or a solicitor. A solicitor will act as a professional trustee and is likely to charge extra fees for managing the Trust.
• When drawing up the details for the Trust, make it clear who will be the life tenants, who the beneficiaries will be and how the property should be used.
• Review the Trust regularly to ensure it still meets your needs and wishes.

How much does it cost to set up a Life Interest Trust?

• The cost will obviously vary according to the solicitor you choose so you should get several quotes. Costs can range from £1,500 to £4,000.
• You will be expected to pay legal fees for the initial consultation, to prepare the Trust deed, and for legal guidance and advice throughout the process of setting up the Trust.
• It will cost more, the more complex the Trust is. So if there is more than one property, it will be more expensive to set up.
• You may have to pay administration fees to cover the ongoing administration of a Life Interest Trust.
• While the surviving partner or Life Tenant is still living in the property, they will be liable for costs to the property such as insurance and maintenance.

FAQs