How to Put Your House in a Trust in the UK

Protecting family assets is a crucial aspect of estate planning. One of the most effective ways to achieve this is by placing property in a trust. A trust is a legal arrangement — not a separate legal entity — where a settlor transfers assets to trustees who hold and manage them for the benefit of named beneficiaries. England invented trust law over 800 years ago, and it remains one of the most powerful tools available for protecting family wealth. We’ll guide you through the process of putting your house in a trust, highlighting the importance, benefits, and practical steps involved.

By holding property in a trust, individuals can protect their assets from a range of threats — including care fee assessments, divorce claims, and creditor disputes — while also bypassing probate delays. For more information on the benefits, you can visit our article on whether putting a house in a trust is worth it. The right trust structure can also offer inheritance tax (IHT) planning opportunities and provide certainty over how your property passes to the next generation.

Key Takeaways

• Trusts protect family assets from care fees, divorce, creditors, and other threats.
• Property held in trust bypasses probate delays — trustees can act immediately without waiting months for a Grant of Probate.
• The right trust structure can help with inheritance tax planning — but the type of trust matters enormously.
• Trusts provide flexibility in distributing assets according to your wishes, even after your death.
• Trustees become the legal owners of the property and manage it according to the terms of the trust deed.

Understanding What a Trust Is

When it comes to managing and protecting your assets, understanding the concept of a trust is essential. A trust can provide a flexible and powerful solution for estate planning, ensuring that your property is protected during your lifetime and distributed according to your wishes after your death.

Definition of a Trust

A trust is a legal arrangement — developed in England over 800 years ago — where one party, known as the settlor, transfers assets to trustees, who hold and manage those assets for the benefit of the beneficiaries. Crucially, a trust is not a separate legal entity like a company. It has no legal personality of its own. Instead, the trustees become the legal owners of the assets, while the beneficiaries hold the beneficial interest. This separation of legal and beneficial ownership is the foundation of English trust law.

For example, you might place your family home into a trust, naming your children as beneficiaries. The trustees hold the legal title to the property and manage it according to the trust deed, while your children benefit from the arrangement — whether that means living in the property, receiving proceeds from its eventual sale, or simply knowing the home is protected from external threats like care fee assessments or sideways disinheritance.

Types of Trusts Available

In England and Wales, trusts are primarily classified by when they take effect and how they operate. The first distinction is between lifetime trusts (created during your lifetime) and will trusts (created by your will, taking effect on death). Within these categories, the main types include:

• Discretionary Trusts: By far the most common type, accounting for the vast majority of trusts created for asset protection. Trustees have absolute discretion over how to distribute trust income and capital among the beneficiaries. No beneficiary has an automatic right to anything — and this is precisely what provides the protection. If a beneficiary faces divorce, bankruptcy, or a care fee assessment, the answer is simple: they don’t own the assets. The trustees do.
• Bare Trusts: The simplest form of trust. The beneficiary has an absolute right to both income and capital once they reach 18 (or 16 in Scotland). The trustee is essentially a nominee with no discretion. Bare trusts offer no asset protection — once the beneficiary reaches 18, they can collapse the trust and take everything under the principle established in Saunders v Vautier. They are also not IHT-efficient.
• Interest in Possession Trusts: These give an income beneficiary (known as the life tenant) the right to income or use of the trust property during their lifetime. When the life tenant dies, the capital passes to the remainderman (capital beneficiary). These are commonly used in will trusts to protect against sideways disinheritance — for example, ensuring a surviving spouse can live in the family home, but that it ultimately passes to the children of the first marriage.

A common misconception — imported from US estate planning — is that the primary classification is “revocable vs irrevocable.” In English law, revocability is simply a feature of a trust, not the defining characteristic. A revocable trust provides no IHT benefit because HMRC treats the assets as still belonging to the settlor (a settlor-interested trust). For genuine asset protection and IHT planning, irrevocable trusts are the standard. However, “irrevocable” doesn’t mean inflexible — well-drafted trust deeds include standard and overriding powers that give trustees defined flexibility without making the trust revocable.

Purpose of Setting Up a Trust

The primary purpose of setting up a trust is to protect your assets and ensure they are managed and distributed according to your wishes. Specifically, trusts can be used for:

• Bypassing probate delays — When you die, assets held in your sole name are frozen until a Grant of Probate is obtained. This process typically takes 3 to 12 months, and longer if property needs to be sold — sometimes 9 to 18 months in total. During this time, your family cannot access the funds. Trust assets, by contrast, are held by the trustees and can be dealt with immediately — no waiting, no court process.
• Protecting family assets — A discretionary trust protects against care fees, divorce, bankruptcy, creditor claims, and sideways disinheritance. Between 40,000 and 70,000 homes are sold every year in the UK to fund care. A properly structured trust can help prevent your home from being included in a care fee assessment.
• Inheritance tax planning — The right trust structure can help reduce or manage IHT liabilities. 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, more ordinary families than ever are being caught by the 40% IHT charge.

By setting up a trust, you gain peace of mind knowing that your assets are protected and will be distributed according to your wishes. As Mike Pugh of MP Estate Planning says: “Trusts are not just for the rich — they’re for the smart.” For more information on how to protect your family home using a trust, visit our page on Family Home Protection Trust.

Benefits of Putting Your House in a Trust

Placing your house in a trust offers practical, tangible benefits for homeowners looking to secure their assets and protect their families. The benefits go far beyond simple estate administration — they address real threats that affect ordinary UK families every day.

Bypassing Probate Delays

One of the most significant benefits of house trust planning is bypassing probate delays. When someone dies, assets held in their sole name are frozen until the executors obtain a Grant of Probate from the Probate Registry. This process currently takes 3 to 12 months for straightforward estates, and considerably longer where property needs to be sold — sometimes 9 to 18 months in total. During this entire period, bank accounts are locked, the property cannot be sold, and your family may be left struggling financially.

Property held in trust sits outside your personal estate entirely. On your death, the trustees continue to hold and manage the property without any need for probate. There’s no waiting, no court application, and no asset freeze. Your family can access the property and its value immediately, at what is already an incredibly difficult time. Your will also becomes a public document once probate is granted — anyone can obtain a copy for a small fee. Trust arrangements, by contrast, remain private.

Protecting Family Assets

Asset protection is arguably the most compelling reason to place your home in a trust. A properly structured discretionary trust can shield your property from several major threats:

• Care fees — Residential care costs between £1,100 and £1,500 per week in England, and can exceed £1,700 per week in London and the south east. If you have assets above £23,250 (including your home if you’re the sole occupant going into care), you’ll be expected to self-fund. Between 40,000 and 70,000 homes are sold each year to pay for care. If your home is held in a discretionary trust, it is no longer your asset — it belongs to the trust. The key is to plan years in advance — you cannot transfer assets once a foreseeable need for care has arisen, as the local authority may treat this as a deprivation of assets.
• Divorce — With a UK divorce rate of around 42%, the risk of a child’s inheritance being lost in a divorce settlement is very real. If your child inherits your home outright and later divorces, the property could form part of the matrimonial assets. In a discretionary trust, the answer is straightforward: “What house? I don’t own a house.” The trustees do.
• Sideways disinheritance — If your surviving spouse remarries and later changes their will, your children could lose their inheritance entirely. A trust prevents this by locking in who ultimately benefits from the property.
• Creditor and bankruptcy claims — Assets in a discretionary trust are not the beneficiary’s property. This provides a layer of protection that outright ownership simply cannot offer.

Managing Inheritance Tax

House trust planning can play an important role in managing inheritance tax liabilities — but it’s essential to understand that trusts are tax-efficient planning tools, not tax avoidance schemes. The outcome depends entirely on the type of trust and how it is structured.

The IHT nil rate band has been frozen at £325,000 per person since 2009 and is confirmed frozen until at least April 2031. For married couples, unused nil rate band transfers to the surviving spouse, giving a combined allowance of up to £650,000. The residence nil rate band (RNRB) adds a further £175,000 per person (£350,000 for a couple) — but only if the home passes to direct descendants such as children or grandchildren, and only if the estate is worth under £2,000,000. Above that threshold, the RNRB tapers by £1 for every £2 over £2,000,000. Together, this gives a married couple a combined maximum tax-free threshold of £1,000,000.

Certain trust structures — such as MP Estate Planning’s Family Home Protection Trust Plus — are specifically designed to retain eligibility for the RNRB while still providing care fee and asset protection. Other structures, like the Gifted Property Trust, can remove 50% or more of the home’s value from your estate and start the 7-year clock for potentially exempt transfers. The key is specialist advice to match the right trust to your situation.

In summary, putting your house in a trust offers substantial benefits: bypassing probate delays and asset freezes, protecting your home from care fees, divorce, and creditor claims, and managing inheritance tax exposure. When you compare the one-off cost of setting up a trust — from around £850 — to the potential cost of care fees alone (£1,200 to £1,500 every single week until your savings drop to £14,250), it becomes one of the most cost-effective forms of financial protection available to UK families.

The Process of Setting Up a Trust

Creating a trust for your home is a significant decision that requires careful thought, specialist advice, and a clear understanding of the process. Here we walk you through the essential steps involved.

Initial Considerations

Before setting up a trust, you need to consider your objectives carefully. Deciding on the trust’s purpose is the first step. Are you looking to protect your home from care fee assessments? Guard against sideways disinheritance? Reduce your family’s inheritance tax exposure? Plan for a child with vulnerabilities? Your goals will directly shape the type of trust and its structure.

Another key consideration is understanding the implications of transferring your property. Is there a mortgage on the property? If so, the approach changes — typically a declaration of trust is used to transfer the beneficial interest while legal title remains with the mortgagor, because lenders require consent before legal title can change hands. Over time, as the mortgage reduces and the property value increases, more and more of the property’s value sits inside the trust. If there’s no mortgage, a straightforward transfer of legal title using a TR1 form is the standard route.

You should also consider timing. You cannot transfer assets into a trust after a foreseeable need for care has arisen — the local authority may treat this as a “deprivation of assets.” Unlike the 7-year IHT rule, there is no fixed time limit for deprivation of assets claims — but the longer the gap between the transfer and the need for care, the harder it is for the local authority to prove that avoiding care fees was a significant operative purpose. The message is clear: plan years in advance, not months.

Selecting the Right Trust Type

Choosing the right type of trust is critical and depends entirely on your specific circumstances and objectives. There is no one-size-fits-all answer. This is precisely why specialist advice matters — as Mike Pugh puts it: “The law — like medicine — is broad. You wouldn’t want your GP doing surgery.”

• Discretionary Trusts: The most common and versatile type, used in the vast majority of property trust arrangements. Trustees have absolute discretion over distributions. No beneficiary has a right to income or capital — this is the key protection mechanism against care fees, divorce, and creditor claims. Discretionary trusts can last up to 125 years under current law.
• Bare Trusts: The simplest form of trust, but they offer virtually no asset protection. The beneficiary has an absolute right to the capital and income at age 18 and can collapse the trust at that point (under the principle in Saunders v Vautier). Bare trusts are not IHT-efficient and cannot protect against care fees or divorce. They are rarely suitable for property protection.
• Interest in Possession Trusts: Commonly used in will trusts to give a surviving spouse the right to live in the property (as life tenant) while ensuring it ultimately passes to the children (as remaindermen). Useful for preventing sideways disinheritance in blended families. Post-March 2006 interest in possession trusts are generally treated under the relevant property regime for IHT purposes, unless they qualify as an immediate post-death interest (IPDI) or a disabled person’s interest.

MP Estate Planning offers several specialist property trust products, including the Family Home Protection Trust Plus (which retains RNRB eligibility), the Gifted Property Trust (which removes value from the estate and starts the 7-year clock), and the Settlor Excluded Asset Protection Trust (designed for buy-to-let and investment properties). Mike’s approach uses irrevocable trusts with standard and overriding powers — these give trustees defined flexibility to adapt to changing circumstances without making the trust revocable.

Drafting the Trust Deed

Once you’ve decided on the type of trust, the next critical step is drafting the trust deed. The trust deed is the legal document that creates the trust and sets out its terms — including who the trustees are, who the beneficiaries are, what powers the trustees have, and any specific instructions or restrictions on how the trust property should be managed.

A well-drafted trust deed is absolutely essential. It must be comprehensive, legally sound, and tailored to your specific circumstances. Generic or template trust deeds downloaded from the internet are not suitable for property trusts — they frequently contain errors, omit critical provisions, or fail to account for important tax implications such as the gift with reservation of benefit (GROB) rules or the pre-owned assets tax (POAT). Professional drafting by a specialist in trust law is not optional; it’s a necessity.

Alongside the trust deed, trustees should prepare a letter of wishes — a non-binding but important document that provides guidance to the trustees about the settlor’s intentions and preferences. While not legally enforceable, it gives trustees valuable context for making future decisions and can be updated at any time as circumstances change.

By following these steps and working with a specialist, you can create a trust that genuinely meets your needs and provides lasting peace of mind for your family.

How to Choose a Trustee

Choosing the right trustee is one of the most important decisions you’ll make when setting up a trust. The trustees you appoint become the legal owners of your property and are responsible for managing it in accordance with the trust deed.

Duties of a Trustee

A trustee’s duties are significant and legally enforceable. Under English law, trustees must:

• Act in the best interests of the beneficiaries at all times
• Exercise reasonable care, skill, and diligence in carrying out their duties
• Act impartially between beneficiaries — not favouring one over another unless the trust deed permits it
• Comply with all legal and regulatory requirements, including registering the trust on the Trust Registration Service (TRS) within 90 days and filing trust tax returns with HMRC
• Keep accurate records of all trust decisions and transactions
• Not profit from their position (unless the trust deed specifically authorises payment)

A trustee must act in the best interests of the beneficiaries, exercising reasonable care, skill, and diligence in the performance of their duties.

This is a serious responsibility, and it’s why choosing the right people is so important.

Qualities to Look For in a Trustee

When selecting trustees, look for the following qualities:

• Reliability and integrity — you need people you can trust completely
• Financial awareness — trustees will be managing valuable assets
• The ability to make fair, impartial decisions — even under family pressure
• An understanding of the trust’s objectives and the settlor’s wishes
• Willingness to seek professional advice when needed

Remember that a minimum of two trustees is required, and the Land Registry allows up to four trustees to be registered on a property title. The settlor can also be one of the trustees — this is common and allows you to remain involved in decisions about your property.

For more detailed guidance on setting up a trust, you can visit our page on starting a trust for a child.

Professional Trustees vs. Family Trustees

One of the key decisions you’ll make is whether to appoint professional trustees (such as a solicitor or trust company) or family members — or a combination of both.

Professional trustees bring expertise and impartiality, but they charge ongoing fees. Family trustees know the family dynamics and the settlor’s wishes intimately, but they may lack technical knowledge or find it difficult to make tough decisions when emotions are involved.

Considerations for Choosing a Trustee

For most family property trusts, a combination approach works well: family members as trustees, with access to professional advice when needed. It’s also vital that the trust deed includes a clear process for removing and replacing trustees — people’s circumstances change, relationships evolve, and the trust may outlive its original trustees by decades (discretionary trusts can last up to 125 years).

Ultimately, the choice of trustee will depend on your specific circumstances, the complexity of the trust, and the needs of your beneficiaries. By choosing the right trustees and ensuring the trust deed includes proper mechanisms for trustee succession, you can ensure that your trust is managed effectively for generations to come.

Legal Requirements for Trusts in the UK

Understanding the legal requirements is essential when setting up a trust in England and Wales. Trusts are subject to specific registration, tax, and compliance obligations that must be met to ensure they operate correctly and lawfully.

Trust Registration Rules

All UK express trusts — including bare trusts — must be registered on the Trust Registration Service (TRS) with HMRC. This requirement was extended under the 5th Money Laundering Directive and applies regardless of whether the trust has any tax liability. Registration must be completed within 90 days of the trust’s creation. The information required includes:

• Details of the settlor (the person creating the trust)
• Details of all trustees, including their identities and roles
• Details of the beneficiaries and their interests in the trust
• A description of the trust assets

Importantly, unlike Companies House, the TRS register is not publicly accessible. Your trust arrangements remain private — only HMRC and certain law enforcement bodies can access the information.

Tax Implications of Trusts

Trusts have specific tax implications across three main areas — inheritance tax (IHT), income tax, and capital gains tax (CGT). Understanding these is essential for effective trust planning:

• Inheritance tax: Discretionary trusts fall under the “relevant property regime.” The entry charge is 20% on the value transferred above the available nil rate band (£325,000). For most families putting their home into trust, the value falls within the nil rate band — meaning the entry charge is zero. The 10-year periodic charge is a maximum of 6% of trust property above the NRB (again, often zero for a single family home). Exit charges are proportional to the last periodic charge and are typically less than 1%. If the entry and periodic charges are nil, the exit charge will also be zero.
• Income tax: Trust income is taxed at 45% for non-dividend income and 39.35% for dividends, with the first £1,000 taxed at the basic rate. In practice, a family home trust rarely generates significant taxable income unless the property is rented out.
• Capital gains tax: Transferring your main residence into a trust while you’re living in it normally does not trigger a CGT charge, because Principal Private Residence (PPR) relief applies at the point of transfer. Holdover relief may also be available for transfers into and out of certain trusts, deferring any CGT liability. Trustees currently pay CGT at 24% on residential property gains and 20% on other gains, with an annual exempt amount of half the individual level.

Trustees must file an SA900 trust tax return with HMRC for each tax year in which the trust has income or gains. For more detailed information on funding a trust, refer to our guide on how to fund a trust in the UK.

Compliance with Trust Law

Ensuring ongoing compliance with trust law is vital. Trustees have a legal duty to:

• Act in accordance with the terms of the trust deed
• Fulfil their fiduciary obligations to beneficiaries
• Keep the TRS registration up to date (any changes must be reported within 90 days)
• File trust tax returns on time
• Maintain proper records of all trustee decisions and distributions

Failure to comply with these obligations can result in penalties from HMRC and potential personal liability for the trustees. This is why it’s important to work with a specialist from the outset and ensure that trustees understand their responsibilities. A well-structured trust with proper ongoing administration will serve your family for decades — potentially up to the full 125-year maximum trust duration.

Transferring Your House into a Trust

Transferring your house into a trust is the practical step that brings your estate plan to life. The process differs depending on whether the property has a mortgage, and it’s important to get the details right.

Steps to Transfer Ownership

The transfer process depends on your specific circumstances:

If the property has no mortgage:

• The trust deed is prepared and executed, creating the trust and naming the trustees and beneficiaries.
• A TR1 form (Transfer of Whole of Registered Title) is completed. This transfers legal ownership of the property from you to the trustees.
• A Form RX1 is submitted to place a restriction on the title at the Land Registry, noting that the property is held on trust.
• The TR1 and supporting documents are submitted to the Land Registry with the applicable fee. Once processed, the Land Registry updates the title register to show the trustees as the legal owners.

If the property has a mortgage:

• The legal title typically cannot be transferred without the lender’s consent — and most lenders will not consent.
• Instead, a declaration of trust is used to transfer the beneficial interest in the property to the trust, while legal title remains in your name (as the mortgagor).
• This approach is perfectly lawful and is a well-established mechanism in English trust law. Over time, as the mortgage reduces and the property value increases, the proportion of value sitting within the trust grows. Eventually, when the mortgage is paid off, the full legal title can be transferred to the trustees via a TR1 form.

This distinction between legal and beneficial ownership — transferring the equitable interest while the legal title stays with the mortgagor — is a cornerstone of English trust law and has been used for centuries.

Valuing the Property

It is important to obtain an accurate market valuation of the property at the time of transfer. This is needed for several reasons:

• To determine whether the transfer falls within the nil rate band (£325,000), which would mean no entry charge for a discretionary trust
• To establish the base cost for any future capital gains tax calculations
• To assess whether any Stamp Duty Land Tax (SDLT) is payable — typically, SDLT is not charged on transfers into trust where no money changes hands (known as a transfer for nil consideration), but this should be confirmed with a specialist

A professional RICS valuation is advisable, as HMRC may query the value used if it appears significantly below market rates.

Documents Required for Transfer

The following documents are typically required:

• The trust deed — the foundational legal document creating the trust
• The TR1 form (for mortgage-free properties) or declaration of trust (for mortgaged properties)
• Form RX1 — to apply for a restriction on the property title at the Land Registry
• Evidence of identity for all parties (trustees and the settlor)
• A property valuation
• A letter of wishes — providing guidance to trustees about the settlor’s intentions

This is not a DIY process. The interaction between trust law, land law, and tax law is complex, and errors can have lasting consequences. Working with a specialist who deals with property trusts daily is essential to getting it right.

Managing Your Trust

Once your trust is established and the property transferred, ongoing management is essential to ensure the trust continues to operate correctly and achieve its purpose. The good news is that for most family property trusts, the day-to-day management burden is relatively light.

Responsibilities of the Trustee

The trustees’ ongoing responsibilities include:

• Managing the trust property prudently — maintaining insurance, arranging repairs, and making decisions about occupation or rental
• Making decisions in the best interests of the beneficiaries — remembering that in a discretionary trust, no beneficiary has an automatic right to anything
• Keeping accurate records of all trustee decisions, meetings, and distributions
• Complying with tax obligations — filing trust tax returns (SA900) and paying any tax due
• Maintaining the Trust Registration Service (TRS) record — updating it within 90 days of any changes to trustees, beneficiaries, or trust details

Trustees must act impartially between beneficiaries unless the trust deed permits otherwise. They must not profit from their position, and they must always be prepared to justify their decisions.

Ongoing Reporting Requirements

Trustees have specific ongoing reporting obligations to HMRC:

• Filing an SA900 trust tax return for any tax year in which the trust receives income or has chargeable gains
• Paying any income tax or CGT due by the relevant deadlines
• Keeping the TRS registration up to date, including reporting changes to trustees, beneficiaries, or the nature of the trust assets
• Preparing for the 10-year periodic charge — every ten years from the trust’s creation, HMRC will assess whether any IHT is due on the trust assets. For most family homes within the nil rate band, this charge is zero

Keeping on top of these requirements avoids penalties and ensures the trust remains fully compliant. Many families use a specialist trust administration service to handle the reporting.

Making Changes to the Trust

Circumstances change over time, and your trust may need to adapt. Changes that may be needed include:

• Appointing new trustees or removing existing ones — for example, if a trustee moves abroad, becomes incapacitated, or relationships change. The trust deed should include a clear mechanism for this
• Updating the letter of wishes — as your circumstances or family dynamics change, you can update this document to provide revised guidance to the trustees
• Distributing assets to beneficiaries — trustees may decide to appoint trust property to a beneficiary outright, for example when a child reaches a suitable age or maturity
• Adding new assets to the trust — further property, investments, or cash can be transferred in, subject to any IHT implications (remembering that transfers into a discretionary trust are chargeable lifetime transfers, so values above the available nil rate band will attract a 20% entry charge)

Any changes should follow the procedures set out in the trust deed and, where necessary, be documented by a deed of appointment, deed of retirement, or deed of addition. A specialist can advise on the correct process and any tax implications.

By understanding and fulfilling these management responsibilities, you ensure that your trust remains effective, compliant, and fit for purpose — potentially for up to 125 years.

Common Mistakes to Avoid

When placing your house in a trust, being aware of common pitfalls can save you significant time, money, and stress. Here are the mistakes we see most often — and how to avoid them.

Not Seeking Professional Advice

This is the single biggest mistake. Property trusts involve the intersection of trust law, land law, tax law, and potentially care fee planning. Using a generic template trust deed, or working with a general practitioner solicitor who doesn’t specialise in trusts, can lead to serious problems — trusts that don’t provide the intended protection, trigger unnecessary tax charges, or fail to comply with registration requirements. As Mike Pugh often says: “The law — like medicine — is broad. You wouldn’t want your GP doing surgery.” Work with a specialist from the outset.

Underestimating Tax Implications

Trusts have specific tax rules that differ significantly from individual taxation. Common misconceptions include:

• Believing that putting your home into any trust will automatically save IHT — it won’t. A revocable trust, for example, provides no IHT benefit because HMRC treats the assets as still belonging to the settlor (a settlor-interested trust)
• Failing to account for the gift with reservation of benefit (GROB) rules — if you give away your home but continue to live in it without paying full market rent, HMRC treats it as still in your estate for IHT purposes, even if you survive seven years
• Not understanding the relevant property regime for discretionary trusts — while the entry charge, 10-year charge, and exit charges are often nil or very low for a single family home, ignoring them entirely can result in unexpected HMRC assessments
• Overlooking the pre-owned assets tax (POAT) — an annual income tax charge that may apply if you benefit from an asset you’ve previously given away and GROB doesn’t apply

The right trust type, properly structured, manages these issues. The wrong trust type can make things worse. This is why MP Estate Planning uses a 13-point threat analysis through Estate Pro AI before recommending a specific trust structure.

Failing to Update the Trust

A trust is not a “set it and forget it” document. Circumstances change — new grandchildren arrive, trustees become unable to act, relationships evolve, tax laws change. The nil rate band has been frozen since 2009, and from April 2027, inherited pensions will become liable for IHT. Failing to review and update your trust arrangements periodically (including the letter of wishes) can mean the trust no longer reflects your current situation or wishes. We recommend a review every few years, or whenever a significant life event occurs.

To illustrate the importance of avoiding these mistakes:

By being aware of these common mistakes and taking steps to avoid them, you can ensure that your trust works as intended and continues to protect your family for generations to come. Plan, don’t panic — and get specialist advice from the start.

Frequently Asked Questions (FAQs)

As you consider putting your house in a trust, you’ll likely have questions about the process and its implications. Below we address the most common queries about trust formation for property in England and Wales.

Assets in a Trust

You can include a wide range of assets in a trust — not just your primary residence. Other properties, investments, savings, and even life insurance policies can be held in trust. In fact, placing a life insurance policy into trust is one of the simplest and most effective ways to prevent a 40% IHT charge on the payout — and it’s typically free to set up. When putting your house in a trust, consider what other assets might benefit from the same protection.

Changing Your Mind

Whether you can make changes depends on the type of trust. An irrevocable discretionary trust (the most common type for asset protection) cannot simply be “cancelled” by the settlor — that’s what gives it its protective strength. However, well-drafted trust deeds include standard and overriding powers that give trustees significant flexibility to adapt to changing circumstances, such as adding or removing beneficiaries, distributing assets, or appointing new trustees. The letter of wishes can also be updated at any time to reflect changes in the settlor’s preferences. Always consult a specialist before making any changes to ensure there are no unintended tax consequences.

Mortgage Implications

If your property has a mortgage, you generally cannot transfer the legal title to trustees without the lender’s consent — and most lenders will not agree. The solution is a declaration of trust, which transfers the beneficial interest (the equity) to the trust while the legal title remains in your name. This is entirely lawful and doesn’t breach your mortgage terms. As the mortgage is paid down and the property value increases, more of the property’s value sits inside the trust. Once the mortgage is fully repaid, the legal title can then be transferred to the trustees via a TR1 form. It’s essential to understand this mechanism and seek specialist advice to ensure it’s done correctly.

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