How to set up a trust in the UK: the types, the steps and the cost

Setting up a trust in the UK usually comes down to four things: choosing the right type of trust, deciding who the trustees and beneficiaries are, putting the trust in writing through a deed, and then transferring the assets in and registering it with HMRC. None of that is especially complicated on its own. The harder part, and the part worth getting right, is deciding whether a trust suits your situation in the first place.

A trust is simply a legal arrangement where one group of people, the trustees, hold and manage assets for the benefit of others, the beneficiaries. The person setting it up is the settlor. Trusts are used by plenty of ordinary families, not just the very wealthy, but they carry real costs and responsibilities, so it is worth understanding the whole picture before you start.

Step one: choose the right type of trust

The type of trust matters more than almost anything else, because it determines how the assets are controlled, how they are taxed, and what the trust can actually achieve. These are the main types families come across.

• Bare trust: the simplest form, where a beneficiary has an absolute right to the assets and the income. Often used for children, who can take full control at 18 in England and Wales, or 16 in Scotland
• Discretionary trust: the trustees decide how and when beneficiaries receive anything. This is the most flexible type and the most common for family planning, because it can respond to changing circumstances
• Interest in possession trust: a beneficiary has the right to the income or to use the asset, for example a surviving spouse living in a property, while the capital eventually passes to others
• Will trust versus lifetime trust: a trust can be created in your will, taking effect on death, or set up during your lifetime. The two are taxed quite differently

Step two: decide who is involved

You will need to choose your trustees and your beneficiaries. Trustees take on a legal duty to manage the trust properly and in the beneficiaries' interests, so they should be people you trust and who are willing to take on the responsibility. Many families appoint a mix of a trusted individual and a professional. It is also sensible to name what happens if a trustee can no longer act.

Step three: put it in writing and transfer the assets

A lifetime trust is created by a written trust deed, usually drafted by a solicitor or specialist, which sets out the trustees, the beneficiaries, and the rules. Once the deed is signed, the assets need to be formally transferred into the trust. For cash that means moving funds, for property it means changing the legal title, and for investments it means re-registering them in the trustees' names. A trust that is written but never funded does nothing.

Step four: register the trust with HMRC

Most trusts must be registered on HMRC's Trust Registration Service, and many need to be registered even if they produce no tax to pay. Registration is a legal requirement with deadlines, and trustees can face penalties for missing it. The trust may also need its own tax returns each year, depending on its income and gains.

What it costs to set up and run

Costs vary a great deal with complexity. A straightforward trust drafted by a solicitor often costs somewhere from around £1,000 to £3,000 to set up, while more complex arrangements, or trusts holding property, can cost more. On top of the set-up fee there are ongoing costs to plan for: trustee administration, accountancy for tax returns, and professional advice when decisions need to be made.

Those running costs are easy to overlook, but they are part of the real price of a trust. For a modest estate with no particular concerns, the cost and admin can outweigh the benefit. For a larger or more complex estate, the protection a trust offers may be well worth it.

The tax position, in plain terms

Trusts are not a way to make tax disappear. Many lifetime trusts fall under what is called the relevant property regime. Putting in more than the available nil-rate band, which is £325,000, can trigger an immediate inheritance tax charge of 20% on the excess. The trust can then face a periodic charge of up to 6% of its value above the nil-rate band every ten years, and exit charges when assets leave it.

Trusts may also pay income tax and capital gains tax at their own rates. The figures and reliefs change over time and depend on the type of trust, so the tax position should always be checked for your specific circumstances rather than assumed. Reviewed June 2026.

When a trust is not the right answer

This is the part the trust-selling industry tends to skip. A trust set up mainly to avoid care fees can be challenged by the local authority as a deliberate deprivation of assets, and disregarded, so the home is still counted. A trust will not automatically remove your estate from inheritance tax, and it will not suit every family.

Be wary of anyone who cold-calls, uses scare tactics about care costs, charges a large upfront fee, and is vague about the actual benefits. Thousands of families have been sold trusts they did not need, sometimes losing access to their own homes when the firm behind the trust collapsed. A good adviser will tell you honestly when a trust is not worth it.

Simply Estate is an estate planning firm. Our own specialists can talk you through the right type of trust for your situation, or tell you plainly if you do not need one, with a fixed fee agreed up front. Visit our trust set-up page to book your free review.