Wills with trusts: property protection trusts and when they help

What is a will with a trust?

A will with a trust is an ordinary will that, instead of leaving some or all of your estate to people outright, leaves it to trustees to hold for them on terms the will sets out, and the trust only takes effect on your death. GOV.UK calls this a will trust and explains that your personal representative has to make sure the trust is set up properly, with the tax on assets going into it paid, after which the trustees are responsible for any later inheritance tax charges.

The trustees become the legal owners of whatever the will puts into the trust, whilst the beneficiaries are the people who benefit from the income, the capital or both. MoneyHelper notes that executors are often appointed as trustees as well and suggests at least two trustees and probably no more than three or four.

What is a property protection trust?

A property protection trust is a life interest trust over your share of the family home, which usually means your surviving spouse or partner has the right to live in the home for the rest of their life, whilst your share is held for the people you have chosen, often your children, who inherit it when the survivor dies. The name is a label used by solicitors and will writers rather than a term found in legislation or on GOV.UK, and you may also see it called a protective property trust. GOV.UK's guidance describes the arrangement, in which someone is given a right to live in the family home after their spouse's death and the home is held in trust for their lifetime, and in legal terms the survivor has what GOV.UK's page on types of trust calls an interest in possession.

One reason couples consider this kind of trust is what mirror wills leave open. With mirror wills everything normally passes outright to the survivor, whose own will then decides where it goes, so the share the first partner hoped would reach their children can end up elsewhere if the survivor later makes a different will. Putting the first share into a life interest trust fixes where it goes after the survivor's death whilst still letting the survivor stay in the home. MoneyHelper gives the example of a second marriage, in which the income goes to the new spouse and the capital later passes to children from the first marriage.

The trade-off is that the survivor does not own that share, so they cannot sell it or leave it by their own will, and the trustees, who may include the children, have a continuing say in what happens to it.

Do you need to own your home as tenants in common?

Yes, because a property protection trust can only hold a share of the home that your will is able to pass on. GOV.UK's guide to joint property ownership explains that joint tenants have equal rights to the whole property, which goes automatically to the other owner on a death and cannot be passed on by will, whereas tenants in common can own different shares and can each leave their share in their will. If you own as joint tenants, a will trust over the home therefore goes hand in hand with changing the ownership, which GOV.UK calls severance of the joint tenancy.

GOV.UK says there is no fee for registering that change with HM Land Registry, which covers England and Wales. Our guide to joint tenants and tenants in common covers how to check which you have and which forms to use.

What other trusts can a will create?

A will can create other kinds of trust, and a life interest does not have to be over the home, because a will can leave the residue, or a fixed sum, on trust so that the survivor receives the income whilst the capital passes on later.

A discretionary will trust works differently, since nobody is entitled to anything until the trustees decide, and the trustees can choose which of the named beneficiaries receives income or capital, how often and on what conditions. It carries its own tax rules, which our guide to discretionary trusts and how to set up a trust explains in detail.

For children, the simplest option is a bare trust, in which the trustees look after the money or property until the child is entitled to take it, which GOV.UK puts at 18 in England and Wales and 16 in Scotland. A parent's will can instead create a trust for a bereaved minor, which avoids inheritance tax charges if the assets are set aside for the child alone and they become fully entitled by 18, or an 18 to 25 trust, which must give full entitlement by 25.

How is a will trust taxed for inheritance tax?

A life interest created by your will for your spouse or civil partner is normally free of inheritance tax when you die, and the trust property is then counted as part of the survivor's estate when they die. HMRC's manual explains that a life interest arising on death under a will is an immediate post-death interest, so the person entitled to it is treated as owning the underlying property, and that where that person is your spouse or civil partner the spouse exemption covers the whole of the property rather than just the value of the life interest (the exemption is limited where you are a long-term UK resident and your spouse is not).

The arrangement therefore controls where your share goes without taking it outside inheritance tax. The same trust for an unmarried partner is still an immediate post-death interest, but HMRC does not treat cohabiting couples as spouses however long they have lived together, so the spouse exemption does not apply and the share counts against the first estate's own allowances.

The residence nil rate band is not lost under this structure where the home ends up with direct descendants. GOV.UK's worked example is a husband who leaves his house to his wife in trust for her life and then to their children: his own residence nil rate band goes unused, so all of it can be transferred, and when she dies and the house passes to the children her estate claims both her own and the transferred amount. Our guides to the residence nil rate band and the inheritance tax threshold for 2026/27 set out the current figures, the £2 million taper and the freeze until 5 April 2031.

A discretionary will trust is treated quite differently because its assets are relevant property. GOV.UK says a home put into a discretionary trust on death does not qualify for the residence nil rate band even if every beneficiary is a direct descendant, although the estate may still qualify where the trust meets certain conditions, for example a trust for a disabled beneficiary or for children under 25, and the trust itself can face 10-yearly and exit charges of up to 6%.

Can a will trust protect your home from care fees?

It cannot protect the survivor's own assets, which are assessed under the normal charging rules whatever the first partner's will says. In England, the statutory guidance councils follow under the Care Act 2014 says the financial assessment looks across all of a person's own capital and income, and Age UK's factsheet on property and residential care explains that for a jointly owned home it is the person's own beneficial interest that is valued, so the survivor's own share of the house and their savings are assessed in the usual way.

The share held in a property protection trust belongs to the trustees rather than the survivor, and Annex B lists the value of a right to receive income under a life interest among the capital a council must disregard. The guidance does not deal with property protection trusts by name, so how a council treats a particular trust depends on its terms and the facts, and nobody can promise that a home is safe from care fees. Annex E describes deprivation of assets as a person intentionally reducing their own assets to cut their care charges when they knew they needed care, and it lists putting assets into a trust that cannot be revoked as one way this can happen, so a survivor who later moved their own share into a trust for that reason could still be assessed as owning it. Wales, Scotland and Northern Ireland have their own charging rules. The same Age UK factsheet strongly advises caution before transferring property to children or a trust to avoid care costs, and our guide to deprivation of assets and care home fees explains how councils decide.

What do the trustees of a will trust have to do?

The trustees manage the trust property for the beneficiaries on the terms of your will and, in many cases, have to register the trust with HMRC. A trust created by a will that holds only property from the estate is excluded from the Trust Registration Service for two years from the death, and HMRC's manual on will trusts and registration says a will trust still in existence after those two years needs to be registered, which a property protection trust normally will be because it lasts for the survivor's lifetime. HMRC's manual gives 90 days to register once a non-taxable trust becomes registrable, whilst GOV.UK says the two-year exclusion does not apply to a will trust that is liable to UK tax, and a taxable trust has 90 days from becoming liable to register. HMRC can charge a fixed penalty of £5,000 for failing to register or to keep the details up to date, although its guidance says it will not do so where trustees put things right within the time limit it sets.

Beyond registration, the trustees send a trust and estate tax return where the trust has income or gains, and they report any inheritance tax charge on the trust on form IHT100. Where the trust holds a home that is the main residence of someone allowed to live there under its terms, GOV.UK says the trustees pay no Capital Gains Tax when they sell it.

When is it worth paying for advice?

A will with a trust is one of the situations in which paying for advice is usually worthwhile, because the trust has to fit both the way you own your home and the tax rules, and MoneyHelper warns that trust law is complicated and a mistake can trigger an immediate tax charge. MoneyHelper recommends a solicitor or an independent financial adviser, and GOV.UK points to legal and tax advisers and the Society of Trust and Estate Practitioners (STEP). The drafting is usually done by a solicitor regulated by the SRA or by a will writer who belongs to a professional body such as the Society of Will Writers or the Institute of Professional Willwriters.

On cost, MoneyHelper says a basic trust may cost little to set up, whereas a more complex one needs specialist advice and costs more, and a firm acting as a professional trustee will charge for doing so. Scotland has its own trust and succession law, and many provisions of the Trusts and Succession (Scotland) Act 2024 are due to come into force on 14 December 2026, so a Scottish will or Scottish property needs a Scottish solicitor, although HMRC's manual says tax law applies uniformly across the UK.

What to do next if you are considering a will trust

1. Find out whether you own your home as joint tenants or tenants in common, because a trust of your share depends on the second.

2. Write down what you want the trust to achieve, who should benefit during the survivor's lifetime and who should inherit afterwards.

3. Think about who could act as trustees for what may be many years, and ask them before you name them.

4. Take advice on the drafting, the inheritance tax position and any change of ownership before you sign.

5. Leave a note with your will explaining that the trust will need registering with HMRC if it is still running two years after your death.

A trust only deals with what you put into it, so your executors will still have to find and notify every bank, utility, insurer and subscription in your name, which is much quicker when you leave a clear record of what you hold, and if that work does fall to your family, Legacy Trail's free notification service can contact the private-sector companies for them.