Life Interest Trusts and Care Fees in Leicester Explained

By CareFinder Team · Published 2025-11-13 · Last reviewed 2026-09-18

A life interest trust, usually set up in a will, lets a surviving partner live in the home for life while the first partner's share passes to their chosen beneficiaries, such as children. It can protect that share from being used for the survivor's care fees. It does not protect the survivor's own share, and putting a home into trust to avoid fees can be treated as deprivation of assets.

A life interest trust is a way of leaving your share of the family home so that your partner can live in it for the rest of their life, while your share ultimately goes to people you choose, such as your children. Because the survivor only has a right to live there, not ownership of your share, that share generally cannot be used to pay for their care.

It is not a way to protect the whole house. The survivor's own share still counts, and moving a home into trust while you are alive to avoid care fees can backfire. This guide explains how it works for families in Leicester and Leicestershire, under the rules in England.

What is a life interest trust?

A life interest trust (also called an interest in possession trust, or a property protection trust when used for a home) gives one person, the life tenant, the right to live in a property or receive its income for life. When they die, the property passes to other beneficiaries.

GOV.UK's guide to types of trust gives the classic example: a wife receives the income for life, and the capital passes to the children on her death.

For couples, a life interest trust is usually written into each partner's will, rather than set up during their lifetime.

How can it protect part of the home from care fees?

A common arrangement for married couples or civil partners who own their home together:

1. The couple own the home as tenants in common, so each owns a defined share, often half.
2. Each makes a will leaving their share into a life interest trust for the survivor.
3. When the first partner dies, their share goes into the trust. The survivor can keep living in the home.
4. If the survivor later needs a care home, only their own share is assessed as their capital.
5. When the survivor dies, the trust share passes to the children or other beneficiaries.

In England's financial assessment rules, the value of a right to receive income under a life interest is disregarded, as set out in the Care and support statutory guidance.

If the couple own as joint tenants, the whole home passes to the survivor automatically and a will trust cannot catch it. Either owner can change to tenants in common through a notice of severance, without the other's agreement, and register it with HM Land Registry.

What can a life interest trust not do?

• It does not protect the survivor's own share. If the survivor needs long-term care, their share of the home counts after the 12-week property disregard, unless another disregard applies.
• It does not help if both partners are alive and one needs care. While a partner still lives in the home, its value is ignored anyway.
• It does not work as a lifetime giveaway. The statutory guidance lists putting assets into a trust that cannot be revoked as one way someone can deprive themselves of assets.
• It can make life less flexible. The survivor may need trustees' agreement to sell and downsize.

Can putting the house in trust be treated as deprivation of assets?

Yes, if it is done during someone's lifetime to avoid care fees. Councils in England consider whether avoiding care charges was a significant motivation for the timing of a transfer and whether the person could reasonably have expected to need care.

If the council decides deprivation has occurred, it can assess your relative as if they still owned the asset. In some cases it can seek to recover the charges from the person who received it.

A will trust is different: it takes effect on the first partner's death, and they are free to decide who inherits their share. That is why life interest trusts are usually set up in wills.

What should Leicester families know?

Care funding in Leicester and the surrounding area is handled by different councils depending on the address:

• Leicester City Council covers the city. Its paying for care pages explain financial assessments and its deferred payment scheme, including current fees and interest.
• Leicestershire County Council covers the county, including towns such as Loughborough, Hinckley, Melton Mowbray and Market Harborough.
• Rutland County Council covers Rutland.

The means test uses national rules. In England, the upper capital limit in 2026/27 is £23,250 and the lower limit is £14,250, as confirmed in the GOV.UK charging circular.

What other options help avoid selling the home?

• Deferred payment agreements: the council pays care fees and takes a legal charge on the home, repaid on sale or from the estate. Interest and fees apply.
• Property disregards: the home is ignored while a partner, or a relative aged 60 or over or incapacitated, lives there.
• NHS Continuing Healthcare: if needs are primarily health needs, the NHS pays in full, whatever your assets.
• Attendance Allowance: a non-means-tested benefit for people at or over State Pension age who need help with personal care.

When should you get advice?

A life interest trust is a legal document with tax, inheritance and family consequences. Get advice from a solicitor experienced in wills and later-life planning, ideally a member of a recognised specialist body, and consider a regulated financial adviser who specialises in care fees.

Be wary of anyone selling "asset protection trusts" that promise to shield the whole home from care fees. This article is general information, not legal advice.

Frequently asked questions

Can a life interest trust stop my home being sold for care?

It can protect the share of the first partner to die, if set up in their will. It does not protect the survivor's own share, and it does not protect a home placed into trust during life mainly to avoid care fees.

Do we need to own our home as tenants in common?

Usually, yes. If you own as joint tenants, the whole home passes automatically to the survivor, so a will trust cannot apply. Either owner can sever the joint tenancy by notice.

Is there a time limit after which gifts are safe from the council?

No. Unlike the seven-year rule for inheritance tax, there is no fixed period for deprivation of assets. Councils look at motivation and timing, including whether care needs were foreseeable.

Does a life interest trust affect inheritance tax?

It can. Trusts have their own inheritance tax rules, and a life interest for a spouse or civil partner is treated differently from other trusts. A solicitor or tax adviser should check this when drafting your wills.

Who can I contact in Leicester about paying for care?

Contact Leicester City Council adult social care if your relative lives in the city, or Leicestershire County Council if they live in the county. Ask for a needs assessment and a financial assessment.

Key takeaways

• A life interest trust in a will can protect the first partner's share of the home.
• The survivor's own share is still assessed if they need long-term care.
• Owning as tenants in common is usually needed for it to work.
• Putting the home into trust during life to avoid fees can be deprivation of assets.
• Leicester City, Leicestershire and Rutland councils each run their own assessments.
• Take specialist legal advice before changing ownership or wills.