Property Trust Guide

Putting a House in Trust for Children

Protect your family home, reduce inheritance tax, and ensure a smooth transfer to your children — with the right trust structure.

Placing your home in trust for your children is one of the most powerful estate planning strategies available — but it must be done correctly. This guide explains the benefits, the different types of trust, the tax implications, and the steps involved, so you can make an informed decision with the help of a specialist solicitor.

Speak to a Trusts Solicitor Read the Guide

Benefits Types of Trust Tax Implications How to Set Up FAQs Related Guides

Why families put their home in trust

Putting a house in trust for children is an effective estate planning strategy — but it is not right for everyone. The right approach depends on your financial goals, family circumstances, and how much control you want to retain. This guide covers everything you need to know before making a decision.

Benefits of Putting Your House in Trust for Children

A properly structured property trust can deliver significant benefits — from protecting the family home to ensuring a smooth, private transfer to your children.

Protection from Care Home Fees

Without a trust, your property may have to be sold to fund residential care costs. A properly structured irrevocable trust — set up well in advance and not solely to avoid care fees — can shield the family home from those expenses. Timing and declared intention are critical: local authorities apply strict deprivation of assets rules.

Inheritance Tax Mitigation

Moving a property out of your personal estate can significantly reduce the eventual IHT burden on your children. For an irrevocable trust to be effective, you must survive seven years after the transfer. If you continue to live in the property, HMRC may treat it as a gift with reservation of benefit — specialist advice is essential.

Protection from Creditors and Legal Claims

Assets held in a properly structured irrevocable trust are generally protected if a child faces bankruptcy, divorce, or a lawsuit. This keeps family wealth firmly within the family rather than being exposed to a beneficiary's personal financial difficulties.

Bypassing Probate

Because the trust — not the individual — legally owns the property, the house falls entirely outside the probate estate. On death, the property transfers to your children swiftly, privately, and without court fees, avoiding the slow, expensive, and publicly visible probate process.

Protection for Minor Children

Children under 18 cannot legally own property. A trust holds the asset securely on their behalf until a specified age — for example, 21 or 25. Trustees manage the property according to the trust document, ensuring the asset is preserved and used in the children's best interests.

Control Over How and When Children Inherit

A trust allows you to specify the age at which children inherit, the conditions under which they can access the property, and what happens if a beneficiary dies before you. This level of control is not available with a simple outright gift or a basic will.

Important: While the benefits are real, they come with conditions and caveats. The wrong type of trust, or a trust set up without proper advice, can fail to deliver any of these benefits — and may create significant legal, tax, and family problems. Always take specialist advice before proceeding.

Types of Trust for Your Home

Choosing the right trust structure is the most important decision in this process. Each type has different implications for control, tax, and protection.

Revocable Trust

Advantages

You retain full control during your lifetime
Can be altered, amended, or dissolved at any time
Flexible — you can change beneficiaries or terms
Avoids probate on death

Disadvantages

Property still counts as part of your estate for IHT
Does not protect against care home fee assessment
No creditor protection — assets remain accessible

Best for

Those who want flexibility and probate avoidance but are not primarily concerned with tax or care fee protection.

Irrevocable Trust

Advantages

Strongest protection from care home fees (if set up early)
Can reduce IHT liability if you survive 7 years
Assets generally protected from beneficiaries' creditors
Property passes outside your estate on death

Disadvantages

You permanently relinquish ownership of the property
Cannot be changed without consent of all beneficiaries
May trigger immediate CGT and SDLT charges
Deprivation of assets rules apply if set up to avoid care fees

Best for

Those with a long-term estate planning strategy who are prepared to give up control in exchange for stronger protection.

Living Trust (Inter Vivos)

Advantages

Active during your lifetime — provides immediate protection
Avoids probate on death
Can be revocable or irrevocable
Stronger lifetime protections than a testamentary trust

Disadvantages

More complex and costly to set up than a will
Ongoing administration required
Tax implications depend on whether revocable or irrevocable

Best for

Those who want lifetime protections and a smooth transfer of property to children without going through probate.

Testamentary Trust

Advantages

Simpler to set up — created within your will
Lower initial cost than a living trust
Holds property for minor children until a specified age
Trustees manage the asset according to your wishes

Disadvantages

Only comes into existence on your death
Does not provide lifetime protections
Property still goes through probate before entering the trust
No protection from care fees during your lifetime

Best for

Those who want to protect property for minor children after death, without the complexity of a living trust.

Not sure which trust is right for you? The choice between a revocable and irrevocable trust, or between a living trust and a testamentary trust, depends on your specific circumstances, financial goals, and family situation. Our specialist solicitors can assess your position and recommend the most appropriate structure.

Get personalised advice

Tax Implications of Putting Your House in Trust

Tax is one of the most complex aspects of property trusts. Understanding the implications before you proceed is essential.

Capital Gains Tax (CGT)

Transferring your home into trust is a disposal for CGT purposes
Private Residence Relief (PRR) may be available at the point of transfer if the property is your main home
Once in trust, PRR may be lost or restricted — meaning future gains are taxable
Trustees pay CGT at 24% on residential property gains (2024/25 rate)

Inheritance Tax (IHT)

If you continue to live in the property, HMRC treats it as a gift with reservation of benefit
The property remains in your taxable estate unless you pay a full market rent to the trust
For an irrevocable trust to reduce IHT, you must survive 7 years after the transfer
Discretionary trusts face 10-year anniversary charges of up to 6% of the trust's value

Stamp Duty Land Tax (SDLT)

Transferring a mortgaged property into trust triggers SDLT on the outstanding mortgage
The 3% SDLT surcharge for additional dwellings may apply in some circumstances
SDLT must be paid within 14 days of completion of the transfer
Unencumbered properties transferred into trust may not trigger SDLT

Care Home & Deprivation of Assets

Local authorities apply strict deprivation of assets rules
If a trust appears to have been set up solely to avoid care fees, the authority can challenge it
Legal timing and declared intention are critical — the trust must not be set up purely to avoid care costs
Early planning — well before care needs arise — is essential for this strategy to work

CGT step-up benefit: Structuring the estate correctly may allow your children to benefit from a revaluation of the property for CGT purposes at the time of your death — rather than the original purchase price — significantly reducing their tax liability if they later sell. This is a key advantage of certain trust structures that a specialist solicitor can help you access.

How to Set Up a House Trust for Children

Setting up a property trust is a formal legal process that requires specialist expertise. Here are the key steps involved.

Choose the Right Trust Structure

The first and most important decision is which type of trust is appropriate for your circumstances. A revocable trust offers flexibility but limited protection. An irrevocable trust offers stronger protection but requires you to relinquish ownership. A testamentary trust is simpler but only takes effect on death. A specialist solicitor can help you identify the right structure.

Draft the Trust Deed

The trust deed is the formal legal document that sets out the terms of the trust — who the trustees are, who the beneficiaries are, at what age children can access the assets, and how the trustees should manage the property. The deed must be carefully drafted to achieve your objectives and avoid unintended tax consequences.

Transfer the Property Title

The property must be formally transferred to the trust via the Land Registry. The trust then becomes the legal owner of the property. This is a legal transaction that requires a solicitor and may trigger stamp duty land tax and capital gains tax depending on the circumstances.

Appoint Trustees

Trustees can be trusted family members, friends, or professional solicitors. They have a strict legal duty to manage the trust in the best interests of the beneficiaries, guided by the rules in the trust document. Choose trustees who are trustworthy, capable, and likely to outlive you.

Register with HMRC

Since 2022, most UK trusts — including property trusts — must be registered with HMRC's Trust Registration Service (TRS), even if they have no immediate tax liability. Your solicitor can handle the registration as part of the trust setup process.

Professional guidance is essential throughout this process. The wrong trust structure, a poorly drafted trust deed, or an incorrectly executed transfer can result in the trust failing to achieve its objectives — and may create significant tax, legal, and family problems. PDA Law's specialist wills and trusts team can guide you through every step.

Trust vs. Other Ways to Pass Your Home to Children

A trust is not the only way to pass your home to your children. Here is how it compares to the main alternatives.

Method	Avoids Probate	IHT Protection	Care Fee Protection	Complexity
Living Trust (Irrevocable)	✅ Yes	✅ If 7yr rule met	✅ If set up early	High
Living Trust (Revocable)	✅ Yes	❌ No	❌ No	Medium
Testamentary Trust (via Will)	❌ No	⚠️ Limited	❌ No	Low–Medium
Will (no trust)	❌ No	⚠️ Limited	❌ No	Low
Outright Gift	✅ Yes	✅ If 7yr rule met	⚠️ Risky	Low
Tenants in Common	❌ No (share)	⚠️ Partial	⚠️ Partial	Low

Explore Related Topics

Read our supporting guides on specific aspects of putting a house in trust for children.

Benefits of Putting Your House in Trust

A deeper look at the key benefits — from care fee protection to bypassing probate — and when they apply.

How to Set Up a House Trust

A step-by-step walkthrough of the trust setup process — from choosing the right structure to registering with HMRC.

Protecting Your Home: Trusts Explained

How trusts protect your family home from care costs, creditors, and family disputes — clearly explained.

Estate Planning: Trust for Family Homes

How property trusts fit into a broader estate planning strategy for families with significant property assets.

Speak to a wills and estates solicitor today. Sensitive, professional advice — costs explained clearly before any work begins.

No obligation — talk through your options first. Chester, Cheshire & North Wales.

SRA Regulated

Sensitive & Confidential

Free Initial Consultation

Chester, Cheshire & North Wales

Speak to a Wills Solicitor

Laura Kirton — Wills & Probate Solicitor

Darren Steele — STEP Member

Nikolina Vukovic — Legal Executive

David Stahler — Estates Executive

Frequently Asked Questions

Can I still live in my house if it is in a trust?

This depends on the type of trust and how it is structured. With a life interest trust, you can retain the right to live in the property for your lifetime. However, if you simply transfer the property into a discretionary trust, your right to occupy is at the trustees' discretion — not guaranteed. The trust deed must be carefully drafted to protect your position.

Will putting my house in trust protect it from care home fees?

Potentially — but only if the trust is set up well in advance and not solely to avoid care fees. Local authorities can look back at asset transfers and treat a deliberate deprivation of assets as still belonging to you for care fee assessment purposes. Timing and legal advice are critical.

Does putting my house in trust avoid inheritance tax?

Not automatically. If you continue to live in the property after transferring it into trust, HMRC will treat it as a gift with reservation of benefit and include it in your taxable estate. To avoid this, you would need to pay a market rent to the trust. For an irrevocable trust to reduce IHT, you must survive 7 years after the transfer.

What age can children access the property in a trust?

You specify this in the trust deed. Common ages are 18, 21, or 25. The trustees manage the property on behalf of the children until they reach the specified age. You can also include conditions — for example, that the property can only be used for a first home or that it must not be sold without trustee consent.

What is the difference between a revocable and irrevocable trust?

A revocable trust can be changed or cancelled by the person who created it during their lifetime. An irrevocable trust cannot be changed once established without the consent of all beneficiaries and, in some cases, a court order. Irrevocable trusts offer more protection from creditors and care fees but involve a permanent loss of control.

Do I need to register a property trust with HMRC?

Yes. Since 2022, most UK trusts — including property trusts — must be registered with HMRC's Trust Registration Service (TRS), even if they have no tax liability. Failure to register can result in penalties. Your solicitor can handle the registration as part of the trust setup.

What happens to the trust when I die?

The trustees continue to manage the trust according to the trust deed. The property does not go through probate — it passes directly to the beneficiaries (your children) in accordance with the terms you set out. This is one of the key advantages of a living trust over a testamentary trust or a simple will.

Is a trust better than leaving the house in my will?

It depends on your objectives. A will is simpler and cheaper, but the property goes through probate and does not provide lifetime protections. A living trust avoids probate and can provide care fee and creditor protection — but at greater cost and complexity. A specialist solicitor can help you decide which approach is right for your circumstances.

Ready to Explore a Trust for Your Home?

Our specialist wills and trusts solicitors in Chester can assess your circumstances and recommend the most appropriate structure — without the jargon.