Care home fees — can a Property Protection Trust really protect your home?

Few questions come up more often around the kitchen tables we visit than this: 'If one of us has to go into a home, can the council take the house to pay for it?' The honest answer is: it depends, but yes, in many cases it can. Equally honestly: there are legitimate planning steps you can take to protect at least part of the family home, and the most common is the Property Protection Trust written into a will. This guide explains how care fee funding actually works in 2026, what a Property Protection Trust does and does not do, and the strict rules around 'deliberate deprivation of assets' that catch out the unwary.

How care fees are funded in England in 2026. If you need residential care (a care home) or significant care at home, the local authority will carry out a financial assessment to decide how much you must pay yourself and how much they will contribute. The assessment looks at both your income (pensions, savings interest, investment income) and your capital (savings, investments and — usually — your home). The current capital thresholds in England are: above £23,250 you pay the full cost of your care; between £14,250 and £23,250 you pay a contribution; below £14,250 your capital is disregarded for the means test, although your income is still assessed.

A long-promised reform that has not yet arrived. The Conservative government legislated in 2021 for an £86,000 lifetime cap on personal care costs and significantly higher capital thresholds (£100,000 upper, £20,000 lower), originally due to take effect in October 2023, then delayed to October 2025. The current Labour government has indicated the reforms remain under review but no new implementation date has been confirmed at the time of writing. Until that changes, the £23,250 / £14,250 thresholds continue to apply.

When is the family home counted in the assessment? Where you go into residential care, the value of your home is generally counted as part of your capital — pushing most homeowners straight above the £23,250 threshold and into the position of paying the full cost of their care, currently averaging around £45,000 to £60,000 per year for residential care and £55,000 to £80,000 per year for nursing care, with the most expensive areas (parts of the South East and central London) significantly higher. The home is, however, disregarded in several specific situations: when your spouse or civil partner is still living there; when a relative aged 60 or over is still living there; when a child of yours under 18 is living there; or when a relative who is incapacitated is living there.

How a Property Protection Trust works. A Property Protection Trust (sometimes called a 'Life Interest Trust' or 'Right of Occupation Trust') is a trust structure written into the wills of a married or cohabiting couple who own their home as tenants in common. On the first death, the deceased's half-share of the home is left into a trust rather than to the surviving partner outright. The trust gives the surviving partner the right to live in the home for the rest of their life (the 'life interest'), but the underlying half-share is held for the ultimate beneficiaries — typically the couple's children — and is not legally owned by the survivor.

Why the structure protects half the home. When the survivor later goes into care, the local authority financial assessment looks at what the survivor actually owns. They own only their original half of the home; the other half is held in trust and is not theirs. The local authority therefore cannot take the trust half to pay for the survivor's care fees, regardless of how much care they need. The half held in trust passes to the children intact when the survivor eventually dies. The survivor's own half is, of course, still in their estate and may be required to fund their care — but at least one half-share is preserved for the family.

The critical condition: tenants in common, not joint tenants. A Property Protection Trust only works if the couple owns the home as tenants in common, meaning each owns a defined share that can be left to whoever they wish in their will. Most married couples in England and Wales own their homes as joint tenants, meaning the survivor automatically inherits the whole property regardless of any will. To use a Property Protection Trust, the joint tenancy must first be 'severed' — a simple legal step that takes a few days and a small Land Registry fee. We handle severance as part of the trust set-up.

The deliberate deprivation rule. Local authorities are required by the Care Act 2014 and the associated Care and Support Statutory Guidance to consider whether assets have been deliberately disposed of with the purpose of avoiding care fees. If the local authority concludes that you have deliberately deprived yourself of an asset, they can treat you as still owning it — meaning the protection collapses. The rule applies regardless of when the deprivation occurred; there is no statutory time limit. The two factors the local authority must weigh are (1) was avoiding care fees a significant motivation, and (2) was care reasonably foreseeable at the time the disposal happened?

Why the Property Protection Trust generally survives the deliberate deprivation rule. Crucially, a Property Protection Trust only takes effect on death. The trust is created by the will of the first spouse to die — it is not a lifetime gift, it is not a transfer the surviving spouse arranged to dodge their own future care fees, and it is not capable of being characterised as deliberate deprivation by the survivor (because the survivor never owned the trust half-share at all). For this reason, Property Protection Trusts written into wills are generally considered a robust planning tool that does not fall foul of the deliberate deprivation rule — provided, of course, that the will is properly drafted and the joint tenancy is properly severed.

What does NOT work. Two arrangements are particularly likely to be challenged. The first is gifting your home to your children during your lifetime in the hope of putting it out of reach of the means test. This is almost certain to be treated as deliberate deprivation if care is foreseeable, and even where it survives the assessment it triggers other problems (capital gains tax for your children when they sell, loss of your residence nil-rate band, the 'gift with reservation of benefit' rules for IHT purposes if you carry on living there). The second is the so-called 'Asset Protection Trust' marketed by some companies, which involves transferring your home into a lifetime trust while you are still alive. These have a long history of challenge from local authorities, are explicitly flagged in the Care Act statutory guidance, and frequently cause more problems than they solve. Be very wary of anyone offering to set one up for you for several thousand pounds.

Practical steps if you are worried about care fees. Talk to a will writer or solicitor about a properly drafted Property Protection Trust written into mirror wills, with the joint tenancy on your home severed at the same time. The cost is typically £400 to £700 all in for a couple. Keep your wills under review — particularly if your circumstances change, if one of you receives a major diagnosis, or if you are considering large gifts. If you are already in or close to needing care, planning options narrow significantly and you should take professional advice straight away. Will Guard offers free home consultations across the North of England — call 0330 223 7844 to arrange one.