In order to best protect your property for your loved ones, we can place it into a Lifetime Property Trust. In some cases, this is the ultimate way to protect your most valuable asset for the future.

Hopefully this guide will answer some of the questions that you may have regarding Property Trusts – however, please visit our FAQs page for more information. Each person’s circumstances are unique, so please get in touch with us to discuss your requirements in more detail.

What is a Lifetime Property Trust (LPT)?

• A Trust created during the property owners’ lifetime, which nominates themselves and their loved ones as Trustees and beneficiaries.

• This places their main residential property immediately into the Trustees’ ownership.  The owners become one of the Trustees of the property rather than the owners.

What does a Lifetime Property Trust do?

In some cases, depending on circumstances, writing a Will alone may not be enough to protect your assets sufficiently.  

• A Property Trust protects the whole of your main residential property from third party claims, whilst you retain control of the property.  

• This means that your most valuable asset that you have worked hard for during your lifetime continues to benefit your loved ones for many years.    

Who can create a Lifetime Property Trust?

• A single owner or a couple who own their residential property mortgage-free.

• The property should not be subject to Equity Release.

• The owners must keep the property in good repair.

• The owners become Primary Beneficiaries as they are still living in the property.  However, they can still move house according to their needs.

• The other Trustees can not evict them from the property.

• The owners should be in good health, with residential care a distant future possibility rather than an imminent probability.

Who can be a Trustee?

• Trustees of residential properties are usually the spouse and/or children of the owners.  

• They must be over 18 years old.

• They should be the owner’s close trusted loved ones (usually their children).

• They must be the intended beneficiaries of the Trust once the current owner(s) have passed away.

• They must agree to being a Trustee.

• A typical example: 

  • Mr and Mrs Smith are 65 years old and have two adult children.  

  • They own their main residential property outright and wish their children to benefit from the property once they have passed away.  

  • Mr and Mrs Smith take advice and decide to create a Lifetime Property Trust.

  • Their children agree to be Trustees of the property.

  • Mr and Mrs Smith and their children all become Trustees of the Smith Family Trust.

  • Mr and Mrs Smith transfer their main residential property into the Smith Family Trust.

  • Mr and Mrs Smith are the Primary Beneficiaries of the Trust because they continue to live in the property and make decisions relating to it.

  • Mr and Mrs Smith live for many years before needing residential care.

  • The property is protected from any third party claims.

How much does a Property Trust cost?

• Creating a Lifetime Property Trust usually costs between £2,000 to £3,000 depending on whether it is being created by a single person or a couple.

• This may at first seem like a lot of money.  However, when compared with the average UK house price (as of April 2022) of over £280,000, the value of what is being protected by the Trust far outweighs the cost.

Limits of a Lifetime Property Trust

• LPTs can not be used in relation to commercial property.

• They do not affect any Inheritance Tax liability.

• They can not be created if the property is subject to a mortgage or Equity Release.  This is because the lender’s consent would be required for the Trust (and is unlikely to be given).

• They should not be created to avoid paying residential or nursing care fees where it is likely that the owners of the property are going to need residential or nursing care in the near future.

What if I become ill or lose my mental capacity after creating a LPT?

• If you can no longer manage your own affairs, your fellow Trustees (usually family members) can manage the property for you.

• The Trustees must make decisions in your best interests.

• Any other properties that you own will be dealt with by the courts.  To retain control of these assets as far as possible, you should consider creating Lasting Powers of Attorney – please see our guide here or contact us here.

We hope that this guide is useful. However, creating a Lifetime Property Trust may be one of the most important decisions you will make - so please contact us for free advice tailored to your individual circumstances. You can also refer to our FAQs page here.