What Are Property Protective Trusts

We are often asked this question as to what is a Property Protective Trust (PPTs).

Property Protective Trusts are by far the most common types of trusts included in wills.

The PPT is designed to take the deceased share in the home, and give someone else (known as the life tenant) a life interest in the property, which will give them the protection of living in the property for the remainder of their lifetime or earlier,  if the trust specifies space i.e. remarriage.

It also ensures that if the survivor requires long term care, at least half of the property is preserved for the benefit of their beneficiaries, who are normally the deceased’s children.

The types of trusts are normally used for married couples or Civil Partners, to ensure the share of the house will ultimately pass to the children at the end of the trust period, whilst still ensuring the interests of the surviving spouse are protected, however the trusts are not restricted to married couples or Civil partners, and can be used for any joint situation.

An example of this is that a married couple, who have not been married before, want to leave their share of the house to their only child. They currently own the house as joint tenants. Their estate planning consultant, or ourselves in these circumstances, would severe the tenancy on the property, and registering them each as 50% owners. They then can have their wills written to represent that if one died, their half of the property will be held in trust for the benefit of their child, but allowing the survivor to live in their share of the property for life, or a specific amount of time.

Considering the above, one has to ask yourself ‘Joint Tenants’ or ‘Tenants in Common’?

Considering the point above with regards to the severance, when considering a PPT, it is important to be able to distinguish the difference between, Tenants in Common (TIC) and Joint Tenants (JT). The reason for this is that the property must be held as Tenants in Common to enter the Trust.

What Does this Mean?

To simplify, both TIC and JT refer to how a property is held or owned, and this ownership is registered with the Land Registry. Traditionally when houses were purchased, the owners would have been registered as Joint Tenants. This would have meant if one tenant had died, the other tenant would have inherited the property by virtue of survivorship.

Holding the property as Tenants in Common, means that each owner holds a share of the home that could be gifted via their will. We would advise the Title is checked, as there are occasions when clients may believe the home is held as Tenants in Common, when, upon checking to verify this, the home is in fact held as Joint Tenants. In this type of work, we will also do an HM Land Registry search to make sure we fully understand the position.

When is it Set Up?

The Trust would be set up on the death of the first testator. The legal title will then be transferred into joint names of the surviving spouse (as an example), and the trustees.

It is important to add here that a property cannot enter a Lift Interest Trust on death, as until the mortgage has been settled, they are not seen to own the property.

The simplest solution would be to ensure that both clients have life cover in place to cover the mortgage on first death. If on death there is still a mortgage on the property there is nothing in place, the survivor does still have limited options:

They can sell and downsize, as the PPT has downsizing provisions.


A cash loan could be taken out to settle the mortgage.

What is the Point of a PPT?

The main reason for a PPT is the protection it provides for the beneficiaries, i.e. the children, to ensure they are protected and ultimately receive a share of the home.

If the share of the home is simply gifted to the partner directly, this could cause a number of issues – the main one being ‘sideways inheritance’, i.e., the surviving partner re-marries, and the house passes to their new spouse under the will. A PPT will enable the partner to stay in the home, and will avoid the risk of the partner potentially disinheriting the children.

Likewise, if a share of the home is gifted to the children directly, whilst the spouse or partner has the other share, this could cause issues in that the children may want to force step-mum out of the property or insist that she pays rent to remain in the property. A PPT prevents this from occurring, and essentially protects both parties’ interest. It is important to add the beneficiaries will only own a share of the home when the PPT ends, either due to the death of the life tenant or earlier.

Can the Property be Sold?

A PPT can include powers allowing, the life tenant to downsize and use the sale proceeds to purchase a substitute property for the life tenant to live in. The additional proceeds will remain in the trust, and the life tenant can be paid an income from this. This can be useful when the life tenant may not be able to look after a large home as they grow older.

Can the Life Tennant End the Trust Sooner?

If the life tenant (Mr) decides to revoke his life interests, he would simply inform the Trustees that he wants the life interest to end, and the share of the home will be distributed to the beneficiaries. However, if the life tenant also owns a share of the property, this does mean there is a risk that the children, now owning a share of the property, could attempt to force a sale of the property.

If the life tenant decides to revoke their life interest, as it will be earlier than death, the distribution to the beneficiaries will be classed as a Potentially Exempt Transfer (PET) from his estate, and therefore will need to survive the seven-year period, for it not to form part of his estate for the IHT purposes.

If you have issues please do not hesitate to contact us.