Trust and Care Home Fees
A Guide to Protecting Your Assets in 2026
With average UK residential care costs reaching approximately £5,192 per month in 2026, many families are investigating how to protect their homes and savings from being entirely consumed by care home fees. Trusts are often discussed as a solution, but navigating the legal landscape requires understanding the strict rules surrounding "deprivation of assets" and the specific types of trusts available.
The UK Care Fee Thresholds (2025/26)
In England and Northern Ireland, if your total capital (including your home, in many cases) exceeds £23,250, you are typically required to fund the full cost of your care.
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Over £23,250: You are a "self-funder" and pay all fees.
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Between £14,250 and £23,250: The local council contributes, but you must also contribute from your income and a "tariff income" based on your capital.
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Under £14,250: The council covers most costs, though you still contribute from your personal income.
Note: Thresholds differ in Scotland (£35,000) and Wales (£50,000).
Can a Trust Protect Your Assets?
A trust is a legal arrangement where you transfer ownership of assets to trustees to hold for beneficiaries. Because you no longer "legally own" the assets, they may be excluded from the local authority’s financial assessment (means test).
However, there is no guarantee of protection. Success depends on the type of trust and, most importantly, why and when it was created.
Common Types of Trusts for Care Planning
1. Life Interest Trusts (Will Trusts): Often considered the "gold standard" for couples. By owning your home as tenants in common rather than joint tenants, each partner can leave their half of the property to a trust in their Will. If the surviving partner later needs care, only their own half-share of the house is assessed; the deceased partner's half is protected for the children.
2. Lifetime Asset Protection Trusts: These are set up while you are still alive. You transfer your home to the trust, but you usually retain the right to live there rent-free. Local authorities are more likely to challenge these trusts than will-based ones.
3. Discretionary Trusts: These offer the most flexibility, as trustees decide how to distribute funds. No single beneficiary has a legal right to the assets, which provides a strong layer of protection against means-testing.
The Risk: Deliberate Deprivation of Assets
The biggest hurdle to using trusts is the Deliberate Deprivation of Assets rule. If a local authority believes you put assets into a trust specifically to avoid paying for care, they can treat you as if you still own those assets (known as notional capital).
Key factors the council considers:
Foreseeability: Did you know you might need care soon when you set up the trust?
Motivation: Was avoiding care fees a "significant operative purpose" of the trust?
Timing: There is no "7-year rule" for care fees as there is for inheritance tax. Councils can look back indefinitely, though a transfer made many years before care was needed is harder to challenge.
Key Takeaways for 2026
Plan Early: The best time to set up a trust is when you are healthy and have no foreseeable need for care.
Document Everything: Ensure your trust has multiple legitimate purposes (e.g., avoiding probate, protecting against a child’s divorce, or inheritance tax planning) rather than just care fee protection.
Seek Legal Advice: Unregulated companies often sell "Asset Protection Trusts" with false guarantees. Always consult an experienced professional adviser specialising in trusts and estate planning to ensure the arrangement is valid and ethical.
Secure Your Family's Future Today
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