How Much to Set Up a Trust Fund in the UK

Setting up a trust fund in the UK is more affordable than most people think — and it could be the smartest financial decision you ever make for your family. As a homeowner, protecting your family’s assets from inheritance tax (IHT), care fees, and family disputes should be a top priority.

At MP Estate Planning, we’re the first and only company in the UK that actively publishes all our prices on YouTube — because we believe in transparency. A straightforward trust typically costs from £850, which is roughly the equivalent of just one week’s care home fees. When you put it in those terms, the real question isn’t whether you can afford to set up a trust — it’s whether you can afford not to.

For more information on funding a trust, you can visit our page on how to fund a trust in the UK. Below, we’ll explore the factors that affect the cost of setting up a trust fund and provide clear guidance on navigating the process.

Key Takeaways

• A straightforward trust in the UK typically costs from £850 — roughly the same as one week in a care home.
• The total cost depends on the type of trust, the assets involved, and whether property needs to be transferred.
• Specialist estate planning guidance is essential — trust law is a niche area, and general solicitors may not have the expertise needed.
• Trusts can protect your home from care fees, reduce IHT exposure, and prevent sideways disinheritance.
• Registration with HMRC’s Trust Registration Service (TRS) is mandatory within 90 days — this is included in most professional setup fees.

Understanding Trust Funds

Trust funds are a cornerstone of estate planning in the UK — and England actually invented trust law over 800 years ago. Understanding what a trust fund is and the types available is the first step toward protecting your family’s wealth.

What is a trust fund?

A trust fund is a legal arrangement — not a separate legal entity — where assets are held by trustees for the benefit of named beneficiaries. The person who creates the trust is called the settlor. Once assets are placed into a trust, legal ownership transfers to the trustees, while the beneficiaries hold the beneficial interest. This separation of legal and beneficial ownership is the foundation of English trust law, stretching back over eight centuries.

Key features of a trust fund include:

• Trustees hold and manage assets on behalf of beneficiaries according to the terms of the trust deed
• Assets held in trust bypass probate entirely — trustees can act immediately without waiting for a Grant of Probate
• Trusts can provide tax-efficient planning, asset protection from care fees and divorce, and control over how and when assets are distributed

Types of trust funds

In the UK, the primary classification of trusts is between lifetime trusts (created during the settlor’s lifetime) and will trusts (which take effect on the settlor’s death). Within those categories, the most common types include:

Discretionary trusts are by far the most widely used type — accounting for the vast majority of family trusts. Trustees have absolute discretion over how income and capital are distributed among a class of beneficiaries. No single beneficiary has any right to the trust assets, which is precisely what provides protection against care fee assessments, divorce claims, and bankruptcy. Discretionary trusts can last for up to 125 years under the Perpetuities and Accumulations Act 2009.

Interest in possession trusts give a named beneficiary (the life tenant) the right to receive income from, or use of, the trust property during their lifetime. When the life tenant’s interest ends, the capital passes to the remainderman (usually the children). These are commonly used in will trusts to prevent sideways disinheritance — for example, ensuring that if a surviving spouse remarries, the original family home ultimately passes to the children from the first marriage.

Bare trusts are the simplest type, where the beneficiary has an absolute right to the capital and income once they reach 18 (under the rule in Saunders v Vautier). However, bare trusts offer no protection against care fees, divorce, or poor financial decisions — because the beneficiary can demand the assets at any time. They are not IHT-efficient and should not be confused with discretionary trusts when it comes to asset protection.

Choosing the right type of trust depends on your specific circumstances and goals. This is a specialist area of law — as Mike Pugh often says, “The law — like medicine — is broad. You wouldn’t want your GP doing surgery.”

Factors Affecting the Cost of Setting Up a Trust Fund

When considering the setup of a trust fund, it’s important to understand the factors that influence the overall cost. The expense can vary, and being clear about these factors helps you plan effectively and avoid surprises.

Complexity of the trust

The complexity of the trust is the single biggest factor in determining setup costs. A straightforward family trust protecting one property with a clear beneficiary structure will cost significantly less than a trust involving multiple properties, buy-to-let portfolios, or complex family dynamics.

• Straightforward Trusts: Typically from £850 — covering the trust deed, property transfer forms (such as a TR1 or Declaration of Trust), Land Registry restriction (Form RX1), letter of wishes, and TRS registration. This covers most families looking to protect the family home.
• More Complex Trusts: Where multiple properties, business assets, or blended family situations are involved, costs typically range from £1,200 to £2,000+. This reflects the additional legal documentation, specialist tax planning, and tailored trust terms required.

For instance, setting up a trust for a child involves specific considerations — such as whether a discretionary structure is better than a bare trust (it almost always is, because a discretionary trust maintains protection until the trustees decide the beneficiary is ready to manage the assets, whereas a bare trust gives them an absolute right at 18). You can learn more about the process in our guide on how to start a trust for a child.

Legal fees involved

Legal fees form the core of the setup cost, and they vary based on the provider’s expertise, the complexity of the trust, and what’s included in the service. Here’s what to look for:

1. Initial Consultation: Many specialist estate planning firms, including MP Estate Planning, offer a free initial consultation. This should include a thorough review of your circumstances and a clear recommendation — not a generic sales pitch.
2. Drafting the Trust Deed: This is the most important document — it sets out the trust terms, the powers of the trustees, and the class of beneficiaries. A well-drafted trust deed by a specialist is what makes the trust legally robust. Costs vary based on the type of trust (e.g., a Family Home Protection Trust versus a Settlor Excluded Asset Protection Trust for investment property).
3. Property Transfer and Registration: If you’re placing property into the trust, there will be Land Registry forms to complete. For an unmortgaged property, this involves a TR1 (transfer of legal title to the trustees). For a mortgaged property, a Declaration of Trust transfers the beneficial interest while legal title remains with the mortgage holder — because the lender’s consent would be needed for a full transfer. Over time, as the mortgage is paid down and the property value rises, all of that growth happens inside the trust.

The key is to use a specialist. General high-street solicitors may charge similar fees but lack the depth of expertise in trust structuring, HMRC compliance, and care fee planning. As Mike puts it, “England invented trust law 800 years ago” — but that doesn’t mean every solicitor understands how to use it effectively for modern families.

Initial Costs of Establishing a Trust Fund

Establishing a trust fund in the UK involves several initial costs, but they’re far more manageable than most people expect. Understanding these upfront expenses helps you plan effectively and see the true value of the protection you’re putting in place.

Professional Fees

Professional fees are the primary initial cost. These are charged by the specialist who drafts your trust deed, handles the property transfer, and registers the trust. At MP Estate Planning, straightforward trusts start from £850, with more complex arrangements typically ranging up to £2,000+.

What should be included in professional fees:

• A detailed consultation to assess your family situation and objectives
• Drafting of the trust deed with tailored terms and trustee powers
• Property transfer documentation (TR1 or Declaration of Trust as appropriate)
• Land Registry restriction (Form RX1) to protect the trust’s interest on the property title
• A letter of wishes — a non-binding but important document guiding trustees on your intentions
• TRS registration with HMRC within 90 days of creation

To put the cost in perspective: the average residential care home in England charges between £1,100 and £1,500 per week. A trust that protects your home from care fee depletion costs the equivalent of roughly one to two weeks of care — but it’s a one-time fee, while care costs continue until your savings are reduced to the £14,250 threshold.

Registration Fees

All UK express trusts — including bare trusts — must be registered with HMRC’s Trust Registration Service (TRS) within 90 days of creation. This is a legal requirement following the 5th Money Laundering Directive. However, unlike Companies House, the TRS register is not publicly accessible, so your trust details remain private.

Registration itself doesn’t carry a separate HMRC fee — the cost is typically absorbed within the professional setup fee. There may also be a small Land Registry fee for recording the restriction on the property title, but this is nominal.

Understanding these initial costs is essential. Both professional fees and registration requirements are straightforward, and a good specialist will give you a clear, fixed-fee quote before any work begins — no hidden extras.

Ongoing Expenses for Trust Fund Maintenance

Once your trust is established, ongoing costs are generally modest — particularly for family trusts holding the family home. Let’s break down what to expect.

Trustee Fees

For most family trusts, the trustees are family members — typically the settlor and their spouse, along with one or two trusted family members or friends. A minimum of two trustees is required, and up to four can be named on a property title at the Land Registry. Family trustees don’t normally charge fees. They manage the trust as part of their responsibility to the family.

Professional or corporate trustees do charge fees, but these are only necessary for complex or high-value trust arrangements. For a typical family home protection trust, professional trustees are rarely needed.

Accountancy Costs

If the trust generates income (for example, from a rental property held in trust), the trustees must file an SA900 trust tax return with HMRC each year. The cost of preparing this return typically ranges from £200 to £500 per year, depending on the complexity. For trusts holding only the family home with no rental income, annual tax returns are generally not required, keeping ongoing costs to a minimum.

Tax Implications

Tax implications are an important consideration, but they’re often far less onerous than people fear:

• Income tax: Trust income is taxed at 45% for non-dividend income (39.35% for dividends), with the first £1,000 at the basic rate. However, for a trust holding the family home where the settlor or a beneficiary occupies it (not generating rental income), income tax is typically not a concern.
• Capital gains tax (CGT): Trustees pay CGT at 24% on residential property gains and 20% on other assets. The annual exempt amount for trusts is half the individual level. Transferring your main residence into trust normally does not trigger CGT because Principal Private Residence relief applies at the point of transfer. Holdover relief may also be available when assets are transferred into or out of certain trusts.
• Inheritance tax (10-year periodic charge): Discretionary trusts fall under the relevant property regime and are subject to a periodic charge every 10 years — but the maximum rate is only 6% on the value above the nil rate band (currently £325,000). For most family homes valued under the NRB, this charge is zero. Exit charges are proportional to the last periodic charge and similarly modest — typically less than 1%. If the entry and periodic charges are nil, the exit charge will also be zero.

For most families, maintaining a trust is far less expensive than the risks it protects against. A single year of care home fees can easily exceed £60,000 — the ongoing cost of maintaining a family home trust is negligible by comparison.

How to Reduce Costs When Setting Up a Trust Fund

There are sensible ways to manage the costs of establishing a trust fund — but it’s vital to understand the difference between cutting costs wisely and cutting corners dangerously.

DIY Trusts

We’ll be straightforward: we strongly advise against DIY trusts. A trust deed is a complex legal document that must be precisely drafted to achieve the protection you need. An incorrectly worded trust deed could fail to protect your assets from care fees, create unintended tax liabilities, or be challenged by a local authority or in divorce proceedings.

Consider these risks of DIY trusts:

• A bare trust mistakenly created instead of a discretionary trust offers no asset protection — the beneficiary can demand the assets at age 18 under the rule in Saunders v Vautier.
• Incorrectly structured property transfers can trigger unnecessary tax charges or fail to sever joint tenancies properly.
• Missing TRS registration within 90 days is a legal breach that can result in penalties from HMRC.
• A trust that doesn’t properly exclude the settlor from benefit may be treated as a gift with reservation of benefit (GROB), meaning the assets remain in the settlor’s estate for IHT purposes — even if they survive more than seven years.

The cost of fixing a badly drafted trust almost always exceeds the cost of doing it right the first time. Trusts are not just for the rich — they’re for the smart. But “smart” means using a specialist.

Comparing Service Providers

When choosing a provider, comparing options is sensible — but compare like for like. Here’s what to look for:

1. Specialism: Does the firm specialise in trusts and estate planning, or do they handle trusts as a sideline to conveyancing or family law? A specialist will structure your trust more effectively and is more likely to anticipate issues around care fees, IHT, and property transfers.
2. Transparent pricing: Look for firms that publish their prices openly. At MP Estate Planning, all prices are published on YouTube — what you see is what you pay. Beware of firms that won’t give you a clear figure until you’ve committed.
3. What’s included: A lower headline fee might exclude property transfer documents, Land Registry forms, TRS registration, or the letter of wishes. Make sure you’re comparing total costs, not just the trust deed fee.
4. Ongoing support: Does the provider offer support after the trust is set up? Circumstances change — you may need to add or remove trustees, update your letter of wishes, or transfer additional assets into the trust.

When you compare the cost of a trust — from £850 — to the potential cost of care fees (£60,000–£80,000+ per year), a 40% IHT bill, or the loss of assets through a child’s divorce, it’s one of the most cost-effective forms of financial protection available to any UK homeowner.

Common Types of Trusts in the UK

UK homeowners have several trust options available, each designed to address different risks and goals. Understanding which type suits your situation is key to effective planning.

Family Trusts

Family trusts — most commonly structured as discretionary trusts — are the backbone of estate planning for ordinary UK homeowners. A family trust is one of the most effective ways to protect the family home from the three biggest threats: inheritance tax, care home fees, and sideways disinheritance.

At MP Estate Planning, the most popular product is the Family Home Protection Trust (Plus), which protects the family home from care fee depletion while retaining eligibility for the Residence Nil Rate Band (worth up to £175,000 per person). For couples, a pair of trusts can protect the home and potentially shelter up to £1,000,000 from IHT using the combined nil rate bands (£650,000) and residence nil rate bands (£350,000).

Charitable Trusts

Charitable trusts are set up exclusively for charitable purposes and offer significant tax advantages. A charitable trust can be attractive for philanthropically minded individuals because charities and charitable trusts are exempt from IHT. Additionally, if you leave 10% or more of your net estate to charity in your will, the IHT rate on the remaining taxable estate drops from 40% to 36% — a meaningful saving on larger estates.

Discretionary Trusts

Discretionary trusts give trustees the power to decide how to distribute trust assets among a class of beneficiaries. No beneficiary has any automatic entitlement — which is exactly why this structure provides such strong protection. If a beneficiary faces a divorce, their spouse cannot claim against assets in a discretionary trust because the beneficiary doesn’t “own” anything. As Mike Pugh puts it, “What house? I don’t own a house.” Similarly, if a beneficiary enters care, the local authority cannot assess trust assets as belonging to that person — provided the trust was established well in advance of any foreseeable need for care.

Discretionary trusts are subject to the relevant property regime for IHT purposes, but the charges are typically very modest. For a trust holding a family home valued below the nil rate band (£325,000), the 10-year periodic charge is zero. Even for higher-value trusts, the maximum rate is just 6% — and exit charges are proportionally smaller still.

By understanding the different types of trusts available and their specific protections, you can make an informed decision about which structure best serves your family. As Mike Pugh says, “Not losing the family money provides the greatest peace of mind above all else.”

Benefits of Using a Specialist for Trust Setup

A specialist’s expertise is invaluable when establishing a trust that genuinely protects your family. Setting up a trust isn’t just about creating a document — it’s about putting in place a legal arrangement that will stand up to scrutiny from HMRC, local authorities, and the courts for decades to come.

Expertise in Legal Matters

Trust law is a niche area within an already broad legal profession. A general high-street solicitor may draft wills and handle conveyancing every day — but they may set up only a handful of trusts per year. A specialist estate planning firm works with trusts daily and understands the nuances that make the difference between a trust that protects and one that fails.

Key areas where specialist expertise matters:

• Avoiding gift with reservation of benefit (GROB): If the trust isn’t structured correctly, HMRC may treat the property as still belonging to the settlor for IHT purposes — defeating the entire purpose of the planning. The Pre-Owned Assets Tax (POAT) is a further pitfall that a specialist will navigate.
• Care fee protection: A specialist will document multiple legitimate reasons for creating the trust — not just care fee avoidance — to withstand a deprivation of assets challenge from the local authority. At MP Estate Planning, we document nine legitimate reasons for the trust, none of which mention care fees. Care fee protection is an ancillary benefit, not the primary purpose.
• Property transfer mechanics: Whether a TR1 (full transfer) or Declaration of Trust (beneficial interest only, where there’s a mortgage) is needed depends on the specific circumstances. Getting this wrong can create serious problems with lenders, HMRC, or the Land Registry.
• IHT structuring: Ensuring the trust preserves eligibility for the Residence Nil Rate Band (£175,000 per person) requires careful drafting that many generalist solicitors overlook. The RNRB is only available where a qualifying residential interest passes to direct descendants — children, grandchildren, or step-children — and the trust deed must reflect this.

Customisation of Trust Terms

Every family’s circumstances are different, and a properly drafted trust should reflect that. A specialist can tailor the trust deed to include:

• Standard and overriding powers for trustees — giving them defined powers to manage the trust effectively without making the trust revocable (a revocable trust provides no IHT benefit, as HMRC treats the assets as still belonging to the settlor)
• A letter of wishes — a non-binding but important document that guides trustees on the settlor’s intentions for how the trust should be administered
• Clear provisions for removing and replacing trustees as circumstances change over the years
• Tailored beneficiary classes that suit your family structure — including provision for future grandchildren, step-children, or dependents

By using a specialist, you ensure that your trust is not only legally sound but built to protect your family for generations. As Mike says, “Plan, don’t panic” — and the time to plan is now, while you’re healthy and the assets are still yours to protect.

Frequently Asked Questions

Understanding the costs and process of setting up a trust fund is crucial — so here are answers to some of the most common questions we receive.

How long does it take to set up a trust fund?

The time depends on the complexity of the trust and how quickly you provide the necessary information. For most family trusts, the process is straightforward:

• Straightforward family trust: Typically 2–4 weeks from initial consultation to completed trust deed, property transfer, and TRS registration
• More complex trusts (multiple properties, business assets, blended families): 4–8 weeks, depending on the additional due diligence and specialist drafting required

The trust deed itself can often be prepared within days — the timeline is usually driven by the property transfer and Land Registry processing.

Can I set up a trust fund without a specialist?

Technically, yes — there’s nothing in law that prevents you from drafting your own trust deed. However, we strongly advise against it. A trust that’s incorrectly drafted may fail to protect your assets, create unintended tax charges, or be successfully challenged by a local authority or in divorce proceedings.

Trust law is deeply technical. A discretionary trust that accidentally gives a beneficiary an interest in possession changes the entire tax treatment. A property transfer that doesn’t properly address a mortgage could breach your lender’s terms. These aren’t mistakes you can easily fix after the fact.

When you compare the cost of professional setup — from £850 — to the potential consequences of getting it wrong, using a specialist is overwhelmingly the better value.

Here’s a realistic breakdown of typical costs for a professional trust setup:

For a free initial consultation to discuss your specific circumstances, book a consultation with our team.

Alternatives to Trust Funds

While trusts are one of the most effective estate planning tools available under English law, it’s worth understanding the alternatives — and their limitations — so you can make a fully informed decision.

Insurance Policies as an Alternative

Life insurance can complement a trust — but on its own, it doesn’t solve the same problems. A life insurance payout that isn’t written in trust will form part of your estate and be subject to 40% IHT on any amount above your available nil rate band. That means HMRC could take nearly half of the payout before your family sees a penny.

The smart approach is to combine insurance with a trust:

• A Life Insurance Trust directs the payout into a trust, keeping it outside the estate for IHT purposes
• This is typically FREE to set up — there’s no excuse not to do it
• Without a trust, the payout is frozen during probate (which can take 3–12 months for the full process) and potentially taxed at 40%

Joint Accounts: A Simple Solution?

Joint accounts are often cited as a “simple” way to pass assets on, but they come with significant risks that are rarely discussed:

Adding someone to a joint account is also a potential gift for IHT purposes and could be treated as deprivation of assets by a local authority if care is later needed.

Will Trusts: A Flexible Option

Will trusts come into effect on the settlor’s death, as specified in their will. They’re commonly used to create an interest in possession trust for a surviving spouse — giving them the right to live in the property — while ensuring the underlying capital passes to the children.

Will trusts are valuable, but they have a key limitation: they only take effect on death. That means they offer no protection during your lifetime — no care fee protection, no protection if you lose mental capacity, and no ability to start the 7-year clock for IHT purposes on potentially exempt transfers. A lifetime trust and a will trust serve different functions, and many families benefit from having both in place.

It’s essential to consult with a specialist to understand which combination of planning tools best protects your family in your specific circumstances.

Conclusion: Is a Trust Fund Worth the Investment?

Setting up a trust fund is one of the most cost-effective decisions a UK homeowner can make — when done properly and with specialist guidance.

Assessing Your Financial Goals

To determine if a trust fund is right for you, consider what you’re protecting against. For most UK homeowners, the key threats are:

• Inheritance tax: The nil rate band has been frozen at £325,000 since 2009 and won’t increase until at least April 2031. With the average home in England now worth around £290,000, ordinary homeowners are being dragged into the IHT net — a tax that was never designed for everyday families. A properly structured trust can help shelter assets and preserve eligibility for the Residence Nil Rate Band (£175,000 per person), which is only available where a qualifying residential interest passes to direct descendants.
• Care fees: Between 40,000 and 70,000 homes are sold every year in the UK to fund care. Average care costs of £1,100–£1,500 per week can deplete a lifetime’s savings to the £14,250 local authority threshold in just a few years. A discretionary trust established years before any foreseeable need for care can protect the family home — but you must plan well in advance, as transferring assets once a need for care is on the horizon risks a deprivation of assets challenge.
• Sideways disinheritance and divorce: With a UK divorce rate of around 42%, the risk of your children’s inheritance being lost through their divorce is very real. Assets held in a discretionary trust don’t belong to any individual — offering strong protection. And for blended families, an interest in possession will trust can prevent a surviving spouse from inadvertently disinheriting children from a first marriage.

A trust starting from £850 — the equivalent of roughly one week’s care fees — is a one-time investment to protect what might be your family’s most valuable asset. As Mike Pugh says, “Trusts are not just for the rich — they’re for the smart.”

Long-term Financial Security

The real value of a trust isn’t measured in pounds saved on setup — it’s measured in the security it provides for decades. A well-structured discretionary trust can last up to 125 years, protecting not just your children but your grandchildren and beyond. It ensures that the family home stays in the family, that the wealth you’ve built isn’t eroded by tax or care fees, and that your wishes are honoured long after you’re gone.

As Mike often says, “Keeping families wealthy strengthens the country as a whole.” The question isn’t whether a trust is worth the investment — it’s whether you can afford to leave your family unprotected.

Interested in setting up a trust?

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