How to Put My House in a Trust

Putting your house into a trust is a legal and financial decision that can offer benefits around inheritance, control of assets and estate planning. While trusts are often associated with the wealthy, they are increasingly used by homeowners in the UK to protect property and manage how it passes on to future generations. If you are considering placing your home in a trust, it is important to understand the legal implications, the types of trusts available and how the process works in practical terms.

This guide explains what it means to put your house in a trust, who it is suitable for, how the law applies in the UK, and what steps are required to complete the transfer. It also outlines the potential risks and advantages to help you make a fully informed decision.

What Does It Mean to Put a House in a Trust?

When you place your house in a trust, you are legally transferring ownership of the property from yourself to the trust. The trust then holds the property for the benefit of named individuals, known as beneficiaries. The trust is managed by trustees, who are responsible for handling the property in accordance with the instructions set out in the trust deed.

You can choose to be a trustee yourself, or appoint others to act on your behalf. In many cases, people place their property in trust during their lifetime to manage inheritance, protect the home from being sold to cover care costs, or ensure a spouse or children can remain in the house after death.

Who Might Consider This Option?

Homeowners who want to plan for how their property will be dealt with after their death often use trusts. It is particularly relevant for individuals with complex family situations, second marriages, vulnerable beneficiaries or those who are concerned about potential care fees in later life.

Some trusts are designed to ensure that a surviving partner can remain in the property while ensuring the capital value passes to children. Others are used to reduce exposure to inheritance tax or to shield assets from creditors or legal claims. Trusts can be set up during your lifetime or written into your will to take effect after your death.

Legal Framework in the UK

Trust law in the UK is well established and governed by a mixture of statute and common law. The main legislation includes the Trustee Act 2000 and the Inheritance Tax Act 1984. Property trusts can take different forms, each with its own tax treatment and rules.

Common types include:

A life interest trust, which allows someone to live in the property during their lifetime while the capital eventually passes to someone else

A discretionary trust, which gives trustees flexibility over who receives the property and when

An interest in possession trust, where the beneficiary has a right to income or use of the property

Legal ownership is transferred to the trustees, and this change is recorded with HM Land Registry. The trust document sets out how the property is to be used and what happens to it under specific circumstances. Legal advice is essential to ensure the trust is properly created, registered and compliant with current law.

Steps to Put Your House in a Trust

The first step is to seek advice from a solicitor who specialises in trusts and estate planning. They will help you decide on the right type of trust based on your goals and family circumstances. Once the trust is drafted, you will sign a trust deed that outlines the terms, the beneficiaries and the powers of the trustees.

You will then need to formally transfer ownership of the property from your name into the name of the trustees. This is done by completing a TR1 form and submitting it to HM Land Registry. If there is a mortgage on the property, the lender’s consent is required. Most lenders do not allow properties with outstanding mortgages to be placed into trusts without full repayment.

You may also need to register the trust with HMRC using the Trust Registration Service, especially if the trust generates income or is liable to pay tax.

Tax Implications and Costs

Putting a house into a trust can have tax consequences, particularly for inheritance tax (IHT), capital gains tax (CGT) and stamp duty land tax (SDLT). Depending on the value of the property and the type of trust, a transfer into trust may trigger an immediate IHT charge if it exceeds the nil rate band. Discretionary trusts and some lifetime trusts are also subject to periodic IHT charges every ten years.

If the property is not your main residence or has increased in value, CGT may be due on the transfer. SDLT may also apply if a mortgage is involved. Legal and professional fees for setting up a trust typically range from £1,000 to £3,000 depending on complexity.

Risks and Pitfalls

While trusts can be an effective way to manage property, they are not suitable for every situation. Once the house is in a trust, you no longer own it personally, even if you remain a trustee. This can affect your ability to sell, remortgage or gift the property freely.

Trusts also require careful management. Trustees have legal responsibilities, including record keeping, reporting to HMRC, and acting in the best interests of beneficiaries. Poorly drafted trusts or failure to comply with tax rules can lead to disputes or financial penalties.

There is also growing scrutiny of trusts used to avoid care home fees. Local authorities can challenge transfers they believe were made deliberately to reduce assets for means-tested support.

Case Example

A couple in their late sixties decided to place their jointly owned home into a life interest trust. They wanted to ensure that if one of them died, the surviving partner could remain in the house for life, but the home would ultimately pass to their children rather than a future partner. Their solicitor drafted a trust deed and arranged for the house to be registered in the names of the trustees. The arrangement gave them peace of mind, with clear terms for both generations.

Conclusion

Putting a house in a trust can be a useful tool for estate planning, inheritance protection and control over how property is used after your death. However, it is a complex area that requires legal advice, a full understanding of tax implications and careful planning to ensure the trust meets your long-term goals. With professional support and a well-drafted trust deed, homeowners can protect their property and provide for loved ones in a way that reflects their wishes.