How to Put a House in a Trust

A trust is a legal way to manage assets. There are different types of trusts for various purposes. Each type offers different tax benefits. Houses and property are some of the assets commonly placed in trust for a variety of reasons.

There are three parties involved in a trust: the ‘settlor’, who put the assets into the trust and provides a ‘trust deed’ which explains how the assets in the trust should be managed; the ‘trustee’, who directly manages the trust; and the ‘beneficiary’, who benefits from the trust.

All these parties can be multiple people or the same person. For example, a couple may put some assets into a trust managed by someone else, making them the ‘settlors’, while also benefiting from the trust, which makes them also the ‘beneficiaries.

Why put a house in trust?

Whilst it is not right for everyone, putting assets into trusts can help protect them from some debts and creditors. This might include legal claims and divorce settlements. It can, in some circumstances, also help avoid probate processes.

A house in trust can be an important part of estate planning. It offers tax benefits like savings on inheritance tax and exemptions on capital gains tax.

There are some potential drawbacks. Setting up a trust fund does cost money in legal fees, with potential ongoing costs as well. The control of the assets held in the trust can become more complicated, with potentially multiple trustees having authority over them.

Furthermore, the ‘trust deed’ can be legally inflexible and unreactive to changing circumstances. Changing it can be a long and difficult process.

Whether placing a house in a trust is right for you will depend on individual circumstances.

The process of putting a house in a trust

The process for putting a house in trust begins with choosing a trustee or trustees. They should be someone reliable like a trusted family member or solicitor. The next step is to write the trust deed, preferably with assistance to ensure the document is legally watertight.

The property will then need to be transferred. This is done in a process managed by the Land Registry and involves signing a trust agreement.

This may incur legal fees and taxes, such as inheritance tax, income tax or Stamp Duty. A lawyer or solicitor will be able to advise on which fees are applicable. HMRC will also need informing of the tax implications.

The trust deed can now be completed, outlining the objectives of the trust and roles and responsibilities of the trustees. The settlor should be monitoring the activity of the trustees if they are able to, while trustees should keep records of their activities.

DFA Law can help individuals who wish to put their assets into trusts. We advise on the applicable types of trust, and how to complete the appropriate processes. Our expert solicitors will ensure you are making the best estate planning decisions for you.

Get in touch on 01604 609560 or email info@dfalaw.co.uk.