How to Put Your House in a Trust in the UK

As a homeowner in the UK, you’re likely concerned about protecting your assets and ensuring your family’s future. One effective way to achieve this is by considering house trust planning. A trust is a legal arrangement that allows you to manage and protect your assets according to your wishes — and England literally invented trust law over 800 years ago.

By transferring your property into a trust, you can benefit from property trust benefits such as protection from care fees, divorce, and creditors, as well as potential inheritance tax savings and bypassing probate delays. We understand that navigating the process can seem complex, but with the right guidance from a specialist estate planner, you can make an informed decision that suits your needs.

Key Takeaways

• Understand the basics of trusts and their role in estate planning
• Learn the actual process of transferring your property into a trust, including the legal forms required
• Discover the benefits of using a trust for asset protection — including care fees, divorce, and creditor protection
• Explore the tax implications of trusts in the UK, including the 7-year rule and the relevant property regime
• Find out how to create a trust that meets your specific needs

Understanding Trusts and Their Benefits

Putting your house in a trust can have significant benefits, but it’s essential to understand how trusts work. A trust is a legal arrangement where the settlor transfers assets to the trustees, who then manage them for the benefit of the beneficiaries. You need a minimum of two trustees, and the same person can be the settlor, a trustee, and a beneficiary — meaning you can stay in control.

What is a Trust?

A trust is a flexible estate planning tool established by a document called a trust deed. The trust deed sets out the rules: who the trustees and beneficiaries are, how the assets should be managed, and what powers the trustees have. Once your home is transferred into the trust, it is owned by the trustees — not by you personally. This means that when threats come along — care fees, divorce, creditors — you can say “What home? I don’t own a home.” Because technically, you don’t. The trust does.

Types of Trusts Available

In the UK, trusts can be classified in two ways. First, by when they take effect: a lifetime trust is established while you’re alive and can give benefits now, while a will trust (testamentary trust) is created through your will and only takes effect after your death.

Second, by how they operate. The most common types are:

• Discretionary trust — the most widely used type (98–99% of trusts settled in the UK). Trustees decide how and when to distribute income and capital among the beneficiaries. Can last up to 125 years in England and Wales.
• Bare trust — the beneficiary has an absolute right to the capital and income at age 18 (16 in Scotland). Simpler, but not IHT-efficient — assets remain in the estate for inheritance tax purposes.
• Interest in possession trust — one beneficiary receives income from the assets, while another (usually children) inherits the capital later. Commonly used to provide for a surviving spouse while protecting assets for children.

Within lifetime trusts, the trust can be either revocable (can be changed or ended by the settlor) or irrevocable (cannot be altered once established, unless the trust deed includes both Standard and Overriding powers). Irrevocable lifetime trusts offer stronger protection and potential tax benefits because the assets are no longer considered part of the settlor’s personal estate.

Tax Implications of Trusts

The tax implications of trusts vary depending on the type. Key considerations include:

• Inheritance tax (IHT) — transferring your home into an irrevocable lifetime trust starts the clock on the 7-year rule. Survive seven years and the asset should fall outside your estate for IHT. However, discretionary trusts (classified as ‘relevant property trusts’) may be subject to entry charges on transfers above the £325,000 nil rate band, periodic 10-year charges, and exit charges.
• Income tax — discretionary trusts pay income tax at the trust rate (currently 45%). Bare trusts are taxed as the beneficiary’s income. Interest in possession trusts pass income to the income beneficiary at their marginal rate.
• Capital gains tax (CGT) — trusts receive only half the annual CGT exemption available to individuals. Transferring property into a trust may trigger CGT on second properties, but your main residence normally qualifies for principal private residence relief.

It’s a common misconception that putting assets in a trust automatically excludes them from inheritance tax — this is not the case, but with careful planning, significant savings can be achieved. You may want to consult with a specialist estate planner or visit MP Estate Planning for more detailed guidance.

Reasons to Put Your House in a Trust

Putting your house in a trust can be a savvy move for UK homeowners looking to secure their assets. Most people think trusts are exclusively for the rich — but the far more common problems trusts solve are protecting your home from care fees and losing the home in a future divorce.

Protecting Your Assets

The primary reason to put your house in a trust is asset protection. By transferring your property into a trust, you can safeguard it against multiple threats:

• Care fees — every year, 40,000 to 70,000 homes are sold to pay for local authority care in the UK. Putting your home into trust years in advance of care means your home is much more likely to go to your children and not the local authority. You must do this before there is any “foreseeable need” for care.
• Divorce — with a UK divorce rate of 42%, seeing your children lose their inheritance in a divorce financial settlement is heartbreaking. Assets held in trust are owned by the trustees, not the individual — making them far harder to claim in divorce proceedings.
• Creditors and litigation — if a beneficiary faces bankruptcy or a lawsuit, assets in trust are protected because they don’t personally own them.

Bypassing Probate Delays

When someone dies with assets in their sole name, the family must apply for a Grant of Probate — a process that currently takes a minimum of 9 months. During this time, bank accounts are frozen, property cannot be sold or transferred, creditors are paid first, and HMRC takes its share. Only what remains passes to your loved ones. When you pass away with a lifetime trust, your assets are never frozen because nothing is in your name — so they go instantly to the beneficiaries, saving your family a lot of time and money.

Managing Inheritance Tax

Inheritance tax is charged at 40% on estates above £325,000 — one of the biggest taxes out there. By placing your home in a trust, you can potentially reduce the IHT liability on your estate over time. With some strategies, huge savings can start in as little as 36 months, and after 7 years, the asset should fall outside your estate entirely. However, careful planning is essential — a bare trust won’t help with IHT as the assets remain inside the estate for tax purposes.

Legal Requirements for Creating a Trust

Setting up a trust involves meeting specific legal criteria to ensure its validity. When considering house trust planning, it’s essential to understand the legal framework that governs trusts in England and Wales.

For a trust to be valid, it must satisfy the three certainties: certainty of intention (you deliberately created it), certainty of subject matter (the property is clearly identified), and certainty of objects (the beneficiaries are clearly known). Without these, a trust will not be valid.

Necessary Documentation

The core document is the trust deed, which sets out the rules governing how the assets should be managed, who the trustees and beneficiaries are, and what powers the trustees have. Because trusts are important legal documents, the wording needs to be precise without any room for ambiguity.

Additional documentation required for transferring property into a trust includes:

Role of Legal Advisors

Given the complexity of trust law, professional guidance is essential. The law — like medicine — is broad, and you wouldn’t want your GP acting as your surgeon. Likewise, a general high street solicitor may not be as up-to-date on trust planning, taxes, and strategies as a specialist who deals with trusts every single day. The conveyancing of property into a trust is a regulated activity, and not all conveyancers understand trusts — be careful about who you select.

The Process of Transferring Your House into a Trust

The process of transferring your house into a trust involves several key steps. When you decide to put your house in a trust, you’re taking a significant step towards protecting your assets and ensuring your family’s financial security.

Step-by-Step Guide

1. Check the title and ownership. Is the property mortgage-free or mortgaged? Is it sole ownership or joint tenants? This determines which documents you need. If the property is held as joint tenants, you’ll first need to sever the tenancy and make it tenants in common — otherwise you can’t control what happens to your share.
2. Prepare the trust deed. Work with a specialist estate planner to draft the trust deed, identifying the trustees and beneficiaries and setting out the terms. The wording must be precise with no room for ambiguity.
3. Prepare the transfer documents. If there’s no mortgage, you’ll need a TR1 form to transfer legal title into the names of the trustees. If there is a mortgage, you’ll use a Declaration of Trust to transfer the beneficial interest — you can’t move legal title without the mortgage company’s consent. You may also need a form RX1 to place a restriction on the title. The RX1 is like putting a legal fence around your home — nothing can be sold or mortgaged without trustee consent.
4. Submit all forms to Land Registry. Filing with HM Land Registry (HMLR) is a regulated activity and requires a solicitor or licensed conveyancer. While a trust can have as many trustees as you wish, Land Registry only allows up to 4 people to be listed on a property title. The registration process can take several months, but your home is legally protected from the moment the documents are properly executed.
5. Register the trust with HMRC. All trusts in the UK must be registered on the Trust Registration Service (TRS) within 90 days of settlement — including bare trusts. Don’t skip this step.

For more detailed information on the process, you can visit our page on Family Home Protection Trust.

Costs Involved

The costs of putting your house in a trust vary depending on the complexity of your situation and whether tax planning is involved.

The easiest way to ensure you’re getting a fair price is to compare this against care fees. Care currently costs about £1,700 per week — so the entire cost of a trust is typically equivalent to 2–4 weeks of care. The trust is a one-time fee that can protect your family for up to 125 years.

Common Pitfalls to Avoid

• Creating the trust but never funding it. This is the biggest mistake. Someone signs the trust deed and then does nothing. HMRC doesn’t care about good intentions — if the asset wasn’t transferred, it’s still in your name and fully exposed.
• Moving legal title with a mortgage without lender consent. This is a breach of your mortgage terms. Use a Declaration of Trust to transfer the beneficial interest instead.
• Forgetting to register with the Trust Registration Service. All trusts must be registered with HMRC’s TRS within 90 days.
• Using a conveyancer who doesn’t understand trusts. The conveyancing of property is a regulated activity, and most conveyancers don’t fully understand trust law. Use a specialist.

Selecting the Right Type of Trust for Your House

When it comes to putting your house in a trust, selecting the appropriate type is vital for effective asset management. The right choice depends on your goals, your family situation, and whether you want the trust to protect against care fees, divorce, inheritance tax, or all three.

Bare Trust vs. Discretionary Trust

This is a critical decision when creating a house trust.

A bare trust gives the beneficiary absolute entitlement to the trust assets at age 18 (16 in Scotland). The trustees have very limited discretion. While simpler to administer, a bare trust has a key drawback: it is not IHT-efficient. The assets are still considered inside the settlor’s estate for inheritance tax purposes. It also offers limited protection from care fees and divorce, since the beneficiary has an absolute right to the assets.

A discretionary trust gives the trustees power to decide how to distribute the trust assets among the beneficiaries — what income or capital is paid out, to whom, how often, and under what conditions. This is by far the most commonly used trust in the UK (98–99% of trusts settled). Because no single beneficiary has an automatic right to the assets, HMRC can’t point the finger at anyone and say “that’s your money.” This provides strong protection from care fees, divorce, creditors, and litigation. A discretionary trust can last up to 125 years.

For most homeowners looking to protect their family home, a discretionary lifetime trust — specifically a Family Home Protection Trust — is the most appropriate choice.

Considerations for Joint Ownership

For properties held in joint ownership, creating a trust requires additional steps. The key distinction is between joint tenancy and tenancy in common:

• In a joint tenancy, the property automatically passes to the surviving owner on death (the right of survivorship). This means you cannot leave your share to anyone else — and it can lead to sideways disinheritance if the surviving spouse remarries. Before putting the property into trust, the joint tenancy must be severed to create a tenancy in common.
• In a tenancy in common, each owner holds a defined share that can be passed to whomever they choose. This gives you full control over your share and allows each owner to place their share into trust independently.

If your property is currently held as joint tenants, the first step is to sever the tenancy. This is a straightforward process but is essential — otherwise you cannot control what happens to your share.

Choosing a Trustee for Your Trust

When setting up a trust, one of the most crucial choices you’ll make is choosing your trustees. A trustee is responsible for managing the trust assets and making decisions about distribution, so their role is pivotal. You need a minimum of two trustees.

Qualities of an Effective Trustee

It’s all in the title — “trustee.” Do you trust them to do the job? An effective trustee should possess certain qualities:

• Trustworthiness: The trustee must be someone you trust implicitly to act in the best interests of the beneficiaries.
• Competence: A good understanding of the trust’s purpose and basic financial matters is essential.
• Longevity: You want your trustees to be people who will likely outlive the settlor — usually your adult children or other younger family members.

A settlor can also be a trustee (which keeps you in control), but you should always have additional trustees who are younger. Having backup trustees available is also important for long-term trust management.

Responsibilities of a Trustee

How Trusts Affect Property Ownership

Understanding how trusts affect property ownership is essential for effective estate planning. When you transfer your house into a trust, you no longer legally own the property — the trustees do. But if you are a trustee, you remain in control of the property day-to-day.

Rights of the Beneficiaries

Beneficiaries’ rights depend on the type of trust:

• In a bare trust, the beneficiary has an absolute right to the capital and income at age 18. The trustees have little discretion.
• In a discretionary trust, no beneficiary has an automatic right to the assets. The trustees decide who benefits, when, and how much. This is what makes discretionary trusts so powerful for protection — when a beneficiary gets divorced, they can say “What house? I don’t own a house.” Because they don’t. The trust does.
• In an interest in possession trust, the income beneficiary has the right to income from the trust assets (e.g., the right to live in the property rent-free), while the capital passes to other beneficiaries later.

Responsibilities of the Trustee

Trustees must act in the best interests of the beneficiaries and in accordance with the trust deed. Key responsibilities include managing the trust property (including ensuring it’s properly insured and maintained), keeping accurate records, filing tax returns with HMRC, and ensuring the trust is properly administered with annual reviews.

Maintaining a Trust Once Established

Establishing a trust is just the beginning. The trust protects your assets — but only if it’s funded and properly maintained.

Periodic Reviews and Updates

We recommend reviewing your trust regularly, or whenever significant life events occur — changes in marital status, births, deaths, or changes in financial circumstances. You should also review when legislation changes, as IHT thresholds, trust registration requirements, and CGT allowances can all be updated by the government.

Key things to check during a review:

• Is the trust deed still aligned with your current wishes and family circumstances?
• Are your trustees still appropriate? Do you need backup trustees?
• Does your will match your trust arrangements? (They should work together, not conflict.)
• Are your Lasting Powers of Attorney up to date?

Managing Trust Assets

Managing the property within your trust includes ensuring it’s properly insured, maintained, and that any rental income is accounted for correctly. The trustees must keep accurate records and file trust tax returns (SA900) with HMRC annually. Trustees should also ensure the Trust Registration Service entry is kept up to date.

Common Myths About Putting Property in a Trust

When considering estate planning, myths surrounding trusts can deter homeowners from exploring their options. Let’s clear up the most common misconceptions.

Trusts are Only for the Wealthy

This is the most pervasive myth — and it’s completely wrong. Most people think trusts are exclusively for the rich and people with inheritance tax problems. In reality, the far more common problems trusts solve are protecting your home from care fees and losing the home in a future divorce. Since most families don’t have an IHT problem, holding onto their home and not losing it to care fees is much more important. Trusts have been used in the UK for over 800 years. They’re not just for the rich — they’re for the smart.

Trusts are Too Complicated to Manage

While setting up a trust requires specialist expertise, managing one can be relatively straightforward. The key is working with a specialist estate planner who deals with trusts every single day, rather than a general high street solicitor. Once the trust is properly established and funded, ongoing management involves annual reviews, keeping records, and filing tax returns — tasks your estate planner can support you with.

How to Dissolve or Vary a Trust if Needed

Trusts are designed to be long-term arrangements, but situations may arise where changes become necessary.

Circumstances for Changes

Whether a trust can be changed or dissolved depends on the type of trust:

• A revocable trust can be changed, amended, or revoked by the settlor at any time during their lifetime.
• An irrevocable trust cannot be altered or revoked once established — unless the trust deed includes both Standard and Overriding powers, which may allow the trustees to make certain changes within the scope of those powers.
• A bare trust can be brought to an end by the beneficiary (once they reach 18) under the principle in Saunders v Vautier, since they have an absolute right to the assets.
• A discretionary trust is more complex to dissolve, as no single beneficiary has an absolute entitlement. Changes typically require trustee resolutions and may need legal advice.

Legal Procedures Involved

Any changes to a trust should be made with professional guidance to ensure compliance with trust law and to understand the potential tax consequences. This may include reviewing the trust deed for variation clauses, obtaining necessary consents, and ensuring that any changes are properly documented. For more on whether a trust can be contested, visit our detailed guide.

Frequently Asked Questions about Trusts

Do I still own my home when it’s in a trust?

The short answer is no — the trust owns your home. But the more relevant question is: who controls the trust? If you are a trustee (which you should be), you remain in control of the property day-to-day. You no longer legally own it, yet you control it because you are in charge of it.

Can I put my home in a trust if I still have a mortgage?

Yes, you can. Thanks to the distinction between legal and beneficial ownership — a concept England invented. Legal ownership means your name is on the title. Beneficial ownership means the value that belongs to you after the mortgage is repaid. You can transfer the beneficial interest into trust using a Declaration of Trust, even with an active mortgage. Over time, the mortgage goes down and the value goes up — and all that growth happens inside your trust.

Will a trust protect my home from care fees?

If structured correctly and established years in advance — before there is any foreseeable need for care — a trust can protect your home from being used to pay care fees. You must have legitimate reasons for creating the trust beyond care fee avoidance (such as divorce protection, IHT planning, or avoiding probate). At MP Estate Planning, we document nine annotated reasons for putting a home into trust, none of which mention care fees specifically.

How much does it cost to put my house in a trust?

Prices vary based on complexity and whether tax planning is involved, but typically range from £850 to £2,000 or more. The easiest way to assess value is to compare against care fees at approximately £1,700 per week — the entire cost of a trust is usually equivalent to just 2–4 weeks of care. It’s a one-time fee that can protect your family for up to 125 years.

What is the difference between a bare trust and a discretionary trust?

A bare trust gives the beneficiary an absolute right to the assets at age 18 — it’s simple but not IHT-efficient and offers limited protection. A discretionary trust gives the trustees full power to decide who benefits, when, and how much. This makes it far more flexible and far more protective against care fees, divorce, and creditors. The vast majority (98–99%) of trusts settled in the UK are discretionary trusts.

How does a trust affect inheritance tax?

It depends on the type of trust. Transferring assets into a discretionary lifetime trust starts the 7-year rule. Survive seven years and the assets should fall outside your estate for IHT. However, discretionary trusts are subject to potential entry charges, periodic 10-year charges, and exit charges. Bare trusts are not IHT-efficient. Professional advice is essential to structure the trust correctly.

What happens if I need to make changes to my trust?

If the trust is revocable, you can make changes at any time. If it’s irrevocable, changes can only be made if the trust deed includes the necessary powers (Standard and Overriding powers). Regular reviews with your estate planner ensure your trust stays aligned with your circumstances and any changes in legislation.

Interested in setting up a trust? Schedule a free consultation with our team.