Trusts & Property FAQs

A trust lets you place assets in the care of trustees, who manage them for the benefit of the people you choose. Trusts are commonly used to protect a legacy for children or vulnerable beneficiaries, to provide for a second spouse while protecting your children’s inheritance, and as part of inheritance tax planning.

Yes. A trust set up in your will can allow your new spouse to live in the family home or receive income during their lifetime, while making sure the capital passes to your children afterwards.

The settlor is the person who creates a trust and puts assets into it, either during their lifetime or through their will.

A trustee is the legal owner of trust assets who manages them for the beneficiaries in line with the trust deed or will and trust law.

Trustees must act in the beneficiaries’ best interests, follow the trust terms, invest prudently, keep accounts, avoid conflicts of interest and not profit from their position.

At least two is recommended; two are needed to give a valid receipt for proceeds from selling land. The maximum for trusts of land is usually four.

In a bare trust the beneficiary has an absolute right to the capital and income. Trustees simply hold the assets until the beneficiary is 18 (or 16 in Scotland). It is treated as the beneficiary’s for tax.

Also called a life interest trust, it gives a beneficiary the right to income or to use an asset, such as living in a house, for their lifetime or a set period. The capital then passes to others.

It is a life interest trust where trustees can also advance capital to the life tenant or others if needed. It is common in wills for couples with children from previous relationships.

Trustees decide who among a class of beneficiaries receives income or capital, and when. No beneficiary has a fixed right. It provides flexibility and protection.

A trust for a disabled person or a bereaved minor that can qualify for special, more favourable tax treatment if an election is made to HMRC.

A trust for a person who meets disability conditions. It can receive favourable tax treatment and helps protect means-tested benefits.

A trust created in a parent’s will for a child under 18, where the child becomes absolutely entitled at 18. It has favourable inheritance tax treatment.

A trust created in a parent’s will allowing the child to inherit at any age up to 25, with limited inheritance tax charges after 18.

A trust set up for charitable purposes. It benefits from tax reliefs and may need to register with the Charity Commission.

A trust you set up while alive, as opposed to a will trust, which takes effect on death.

No. Trusts are commonly used in ordinary estates to protect children, vulnerable beneficiaries or a family home in second marriages.

HMRC’s Trust Registration Service (TRS) is an online register most UK express trusts must join, even if no tax is due. Trustees must keep it up to date.

Will trusts are generally exempt from registration for two years after death. After that, most must be registered on the TRS.

Most discretionary trusts are assessed for inheritance tax every ten years, at a maximum of 6% of the value above the available nil-rate band.

A discretionary trust can help protect inheritance from a beneficiary’s divorce, as beneficiaries have no fixed entitlement. Courts can still take trust assets into account in some cases.

Assets properly held in a discretionary trust do not belong to the beneficiary, so they are generally protected from the beneficiary’s creditors or bankruptcy.

It depends on the trust wording. Many trusts include powers for trustees to make changes. Beneficiaries who are all adults with capacity can sometimes agree to end the trust.

Yes. You can be both, but it is advisable to have at least one independent trustee to avoid conflicts of interest.

For trusts created since 6 April 2010, the maximum perpetuity period is 125 years.

The trustees distribute the assets to the beneficiaries according to the trust terms, settle any tax and close the trust.

Yes. Trustees can hold land and buildings. Property held in trust is registered with the Land Registry in the trustees’ names with a restriction.

A restriction entered on the register limits how property can be sold, for example requiring two trustees to sign. It protects beneficial interests.

A will trust into which assets up to the nil-rate band are placed on the first death. It was popular before transferable nil-rate bands and is still used for asset protection.

A trust giving someone the right to live in a property for life or a set time, without owning it.

A fund trustees set aside to cover future costs such as repairs or tax.

Yes. A spousal bypass trust can receive pension death benefits via a nomination, allowing trustees to control funds for children. The 2027 changes mean these should be reviewed.

A discretionary trust set up to receive pension death benefits instead of a spouse, to protect the money for children or a later generation.

The remaining trustees can continue. A new trustee can be appointed under the trust terms or by the surviving trustees.

Yes. A trustee can retire if replaced or if at least two trustees (or a trust corporation) remain.

If all beneficiaries are adults, have capacity and are together absolutely entitled, they can direct changes to trustees. Otherwise, a court application may be needed.

A trust deed is the legal document that creates a lifetime trust and sets out its terms, trustees and beneficiaries.

A protective trust gives a beneficiary a life interest that ends if they try to sell it or become bankrupt, then converts into a discretionary trust.

Assets held in a lifetime trust are not part of your estate for probate, so trustees can deal with them without a grant.

It depends on your goals. A trust in your will can protect your share of the home for your children. Putting your home into a trust during your lifetime is complex and can have tax consequences, so please speak with us first.

No. Trustees must be at least 18.

Guidance to trustees on how you would like them to use their discretion, for example when to release money to children. It is not binding but is usually followed.

Lay trustees are not usually paid but can recover expenses. Professional trustees can charge if the trust deed or will allows it.

A trust corporation is a company authorised to act as trustee, such as a bank’s trust department. It can act alone where otherwise two trustees would be needed.

Yes. A bare trust or discretionary trust can hold money for grandchildren. The choice affects tax, control and when they can access the money.

In a discretionary trust the beneficiary has no fixed entitlement, which helps protect the assets, though courts may consider the trust as a financial resource.

Yes, if the trust deed allows. The house may be owned by the trustees and occupied by the beneficiary.

Trustees must keep the trust deed, minutes of decisions, investment records, accounts and tax returns, and keep the TRS entry up to date.

Many trusts allow loans to beneficiaries, which can be useful, for example for a house purchase, while keeping the value in the trust.

A trust that lets trustees provide for a disabled child throughout their life without affecting means-tested benefits, potentially with favourable tax treatment.

Only if the trust deed gives someone a power to add or exclude beneficiaries. Otherwise, the beneficiaries are fixed.

Usually not. If you retain the right to benefit, the trust may still count as part of your estate for inheritance tax.

Yes. A trust can restrict use to education or give trustees guidance through a letter of wishes.

Under the Trustee Act 2000 trustees have wide investment powers, including buying land, subject to the trust deed and the duty of care.

Trusts are generally private. The TRS register is not public, although certain people with a legitimate interest can request information.

As joint tenants you own the whole property together and it passes automatically to the survivor. As tenants in common you each own a share, which passes under your will.

Check the Land Registry title register. A restriction (Form A) usually indicates tenants in common. You can download the title for a small fee from GOV.UK.

Severance converts a joint tenancy into a tenancy in common, so each owner’s share passes under their will. It can be done by serving written notice on the other owner and registering a restriction.

It is often recommended for couples in second marriages, unmarried couples who contributed unequally, or anyone wanting to protect their share for children. Talk to us about your situation.

The mortgage must be repaid from the estate or by a survivor who takes it on. Life insurance or mortgage protection may pay it off. Lenders usually allow time while the estate is administered.

The mortgage is not wiped out. You can repay it, refinance it in your name, or sell the property.

You become a co-owner with the other beneficiaries. You can agree to sell, one can buy out the others, or you can keep it together, ideally with a written agreement.

No. There is no stamp duty or Land Transaction Tax on inheriting property under a will or intestacy, unless you pay for it (for example to buy out another beneficiary).

You may if it has increased in value since the date of death. The gain is based on the probate value. Private residence relief may apply if you lived there.

Yes, once it has been transferred to you. If other beneficiaries share ownership, you will need their agreement or a financial arrangement.

An assent is the document executors use to transfer property to a beneficiary. It is sent to the Land Registry to update ownership.

After probate, executors complete an assent (form AS1) and send it to the Land Registry with the grant and death certificate.

Yes. By default the gift carries the mortgage with it unless your will says the mortgage must be paid off from the rest of the estate.

It passes under your will. The executors may need to manage tenancies and rents, and income is taxable in the estate. It does not qualify for the residence nil-rate band unless it was once your residence.

Overseas property is often governed by local succession laws and taxes. You may need a local will, and executors may need to follow a local legal process.

Often, yes. A local will limited to the overseas property can speed things up. It must be carefully coordinated with your UK will so neither revokes the other.

Equity release lets you borrow against your home, with the loan and interest repaid from your estate when you die or move out permanently. It reduces what your beneficiaries inherit.

Your share passes under your will, but the housing association’s lease terms apply. The beneficiary may need to meet eligibility conditions or the share may need to be sold.

A spouse, partner or family member may have a right to succeed to the tenancy, depending on the tenancy type and local rules. Otherwise the tenancy ends.

It passes like other property under your will, but the lease terms and ground rent continue. Executors must deal with the freeholder or managing agent.

Yes. Common options are to leave a life interest to your partner with the capital to your children, or to leave shares directly to each.

A document that records each person’s beneficial ownership share, such as 70/30, and what happens if the property is sold. It is essential for unmarried co-owners.

Shares in the company pass under your will, not the property itself. The company’s articles and any shareholder agreement also matter.

The residence nil-rate band can help if your home passes to direct descendants. Beyond that, any planning involving your home needs careful advice because of the gift with reservation rules, so please speak with us.