A Practical Guide To 'Family Home Trusts'

Families change over time, be that through marriage or separation, children growing up, second relationships, or changes in financial or health circumstances. When those changes affect the family home, practical and emotional questions often collide. Who should live there, who ultimately owns it, and how can everyone's interests be protected for the future?

A family home trust offers one way to bring clarity and stability to those moments. It can be created through the Family Court when a couple separates, or as part of broader lifetime or succession planning. In either case, the principle is the same: to ensure that the home continues to serve the family's needs now while safeguarding fairness and long-term security.

Far from being a mechanism only for the wealthy, a well-structured trust can be an everyday way to manage change, which can provide reassurance, flexibility and structure when life feels uncertain.

What is a family home trust?

At its simplest, a family home trust is a legal arrangement that sets out what should happen to a property in response to changing circumstances. It can define who lives there, who owns a share of its value, and when the property should eventually be sold or transferred.

In the family law context, these trusts often arise on divorce or separation. Rather than forcing an immediate sale, the court can order that one party, usually the parent caring for the children, remains in the home for a period while the other's financial share is preserved for the future. This is made possible by the Matrimonial Causes Act 1973, which allows judges to adjust property rights between spouses in the interests of fairness and stability.

In practice, the trust provides a framework. It names the trustees, usually the couple themselves, and sets out who can occupy the property, how costs such as the mortgage, insurance and maintenance are handled, and what happens when the property is eventually sold.

You may hear these arrangements described as Mesher orders or Martin orders. A Mesher Order delays sale until a specific event occurs (for example, when the youngest child finishes education). A Martin Order allows one party to remain in the home for life (or until remarriage or cohabitation), with the other's share deferred until sale.

Family home trusts can also be used where parents have not been married. Under the Children Act 1989, the court has the power to ensure that a home is provided for a child and the parent caring for them, usually on a time-limited basis. At the end of that period, the house or its value normally returns to the parent who provided it.

Although these arrangements are most commonly seen in the context of separation, the same underlying principles (eg, protecting occupation, preserving ownership and planning for eventual sale) also underpin many Private Client trust structures. In estate and succession planning, similar mechanisms can be used to provide a home for a surviving partner, support a vulnerable relative, or safeguard family property for future generations.

Seen this way, family home trusts sit on a continuum that connects immediate family stability with longer-term wealth protection – an area where Family and Private Client expertise naturally work hand in hand.

When are family home trusts beneficial?

Family home trusts come into their own when there is not enough capital to rehouse both adults immediately, or when continuity for children is a priority. They create breathing space, allowing one household to remain stable while protecting the other's financial position for the future.

Their flexibility also makes them valuable in broader family contexts. For example, preventing "sideways disinheritance" in blended families, supporting dependants with long-term health conditions, or managing intergenerational housing arrangements.

In every case, the aim is the same – to combine short-term practicality with long-term fairness, ensuring the home continues to meet the family's evolving needs.

Taxes and administration

Although family home trusts are rarely designed as tax-saving tools, they can still have important tax and administrative implications.

Where the property remains someone's main home, Principal Private Residence Relief for Capital Gains Tax may apply when it is sold, though care is needed if the trust owns multiple properties or the occupier changes. A Private Client solicitor will usually check these details to ensure reliefs are preserved.

Inheritance Tax demands particular attention. If an individual transfers their home into trust but continues to live there rent-free, the property can be treated as a gift with reservation of benefit and therefore remain part of their estate on death yet not benefit from what is known as the Residence Nil Rate Band. This is why "family protection" or "care-fee" schemes should be approached cautiously, as they often fail to achieve what clients expect.

By contrast, trusts created under a court order during divorce are treated differently because their purpose is to achieve financial fairness rather than tax mitigation. These rarely attract immediate charges, though long-running arrangements should be reviewed to ensure compliance over time.

Administrative obligations are also more significant than many realise. Most express trusts that hold UK land must be registered and kept up to date on HMRC's Trust Registration Service (TRS), subject to limited exceptions for certain court-ordered or co-ownership structures. Keeping accurate records and filing on time are essential trustee duties, which is an area where ongoing Private Client support can make all the difference.

When might a family home trust be unsuitable?

A family home trust is not always the right approach. If both parties can move on financially without hardship, a clean break may be simpler. Likewise, if the occupier cannot realistically maintain mortgage payments or upkeep, keeping the property in trust can prolong stress rather than reduce it.

Trusts should also be used cautiously where the main motive is tax or care-fee avoidance. Local authorities have wide powers to investigate whether assets have been deliberately transferred to reduce liability. And because trustees must cooperate in managing the property, the arrangement may not be viable where relationships are too fractured to allow joint decision-making.

How does all of this differ from "putting the house in trust" for lifetime planning?

It is important to distinguish between family home trusts, which are usually created in response to a life event such as separation, and lifetime trusts, which form part of proactive estate and wealth planning.

A family home trust has a defined and often temporary purpose, and that is to provide fairness and stability between partners while their circumstances evolve. Lifetime trusts, by contrast, are forward-looking arrangements. They allow families to plan how property and assets will be managed or passed on, whether to protect younger generations, safeguard a vulnerable family member, or ensure that a surviving partner can remain in the home after death.

Unlike trusts created by court order, lifetime trusts are drafted to reflect the family's long-term intentions. They can offer privacy, flexibility, and continuity, and ensure that the family home continues to serve its purpose across generations.

For separating couples, this kind of forward planning can be particularly valuable once the immediate settlement is resolved. Reviewing Wills, inheritance tax exposure and potential trust structures helps align new financial arrangements with future wishes. At Buckles, our Family and Private Client teams often collaborate at this stage, combining expertise to ensure that short-term housing or financial outcomes fit seamlessly within a longer-term plan.

Families who seek this advice early often find it reassuring as it turns the home from a source of conflict or uncertainty into a cornerstone of family security.

Ongoing trust management and responsibilities

Creating a trust is only the beginning. Trustees have continuing duties – to act fairly between beneficiaries, to manage the property responsibly, and to keep accurate records. They may also face decisions about maintenance, insurance or sale timing, all within the framework of the trust deed.

Private Client solicitors play an essential role in supporting trustees throughout the life of a trust. Regular reviews are often worthwhile, particularly when family circumstances change, for example, when children reach adulthood, a trustee steps down, or one party remarries.

Good trust management is about more than compliance. It preserves harmony, avoids disputes, and keeps the trust aligned with the family's wider financial and personal goals.

Working in tandem

Handled thoughtfully, a family home trust can do far more than postpone a sale. It can preserve stability, protect fairness and create a sense of continuity between the challenges of today and the plans of tomorrow.

Such trusts sit at the intersection of family law and private wealth planning. When lawyers from both disciplines work together, the result is advice that meets immediate needs while preparing families for what lies ahead.

At Buckles, our Family and Private Client teams collaborate closely, whether drafting a trust as part of a divorce settlement, coordinating new Wills, or planning for succession once a case concludes. This joined-up approach means clients receive holistic, practical guidance that balances emotional realities with financial foresight, providing a coherent plan for stability, fairness and long-term security.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.