TRW & Co · Tax, Private Wealth & Family
Trust Solicitors in London
Trust solicitors in London help settlors create trusts, trustees run them properly and beneficiaries enforce their rights. With residence-based inheritance tax since April 2025, business relief capped from April 2026 and pensions entering estates from 2027, many existing trusts need reviewing, not just new ones drafting.
Key pointSince 6 April 2025, whether non-UK assets in a trust escape inheritance tax depends on the settlor's long-term UK residence, which can change year by year, so trusts that were safely outside the tax may now face ten-year and exit charges.
At a glance
125-year perpetuity period
Under the Perpetuities and Accumulations Act 2009, new trusts in England and Wales can last for up to 125 years.
Up to 6% every decade
Relevant property trusts face a periodic inheritance tax charge of up to 6% at each ten-year anniversary, plus exit charges on distributions.
45% trust rate
Discretionary and accumulation trusts pay income tax at 45%, or 39.35% on dividends, above the first £500 of income.
Register within 90 days
Most new UK express trusts must be registered on HMRC's Trust Registration Service, generally within 90 days, even if no tax is due.
Full capital advancement
For trusts created after the 2014 reforms, trustees may advance the whole of a beneficiary's share, not just half, unless the deed restricts it.
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What trust solicitors in London advise on
Trust solicitors in London advise people who set up trusts, the trustees who run them and the beneficiaries who benefit from them. A trust separates the legal ownership of assets from the benefit: trustees hold and manage the property, and must use it for the beneficiaries according to the trust deed or will and the general law. That separation is what makes trusts useful for protecting young or vulnerable family members, keeping family wealth together across generations and managing tax.
Trusts appear in more places than people expect. Wills often create them. Life insurance policies are commonly written in trust. Family homes are held on trust whenever two people own them together. Pension death benefits, employee ownership arrangements and charitable gifts all use trust structures. Some trusts are created deliberately; others arise by operation of law.
A trust becomes a legal question when it is created, when trustees have to make a significant decision, when the tax rules change, and when relationships break down. Each of those moments has changed in recent years, with new inheritance tax rules for internationally mobile families, a register of trusts, and reforms to business relief and pensions. Trust solicitors in London are therefore reviewing many existing structures, not just creating new ones.
The legal framework for trusts in England and Wales
Trust law is largely built on equity, developed by the courts over centuries, with statute filling in powers and duties. The Trustee Act 1925 gives trustees default powers, including the power to apply income for a beneficiary's maintenance (section 31) and the power to advance capital (section 32). For trusts created after the Inheritance and Trustees' Powers Act 2014 came into force, the old limit allowing only half of a beneficiary's share to be advanced was removed, so trustees may advance the whole of it unless the trust deed says otherwise.
The Trustee Act 2000 imposes a statutory duty of care on trustees when exercising many of their powers, gives them a general power of investment, and requires them to consider the standard investment criteria and take proper advice. The Trusts of Land and Appointment of Trustees Act 1996 governs trusts of land, including jointly owned homes, and lets beneficiaries ask the court to resolve disputes about occupation and sale.
Under the Perpetuities and Accumulations Act 2009, the perpetuity period for new trusts is 125 years. The Variation of Trusts Act 1958 allows the court to approve changes on behalf of beneficiaries who cannot consent themselves, such as minors and unborn beneficiaries. The Recognition of Trusts Act 1987 gives effect to the Hague Convention on the law applicable to trusts, which matters when assets or trustees are abroad.
Scotland has its own trust law. The Trusts and Succession (Scotland) Act 2024 modernises Scots trust law, including trustee duties, removal of trustees and recognition of protectors, with provisions being brought into force in stages. Northern Ireland has separate trustee legislation, although UK taxes apply across all three jurisdictions.
Choosing the right kind of trust
The type of trust decides how much control the settlor gives up, how flexible the trustees can be and how the trust is taxed. HMRC's guidance on trusts and taxes uses the categories below.
| Type | How it works | Typical use | Tax headline |
|---|---|---|---|
| Bare trust | Beneficiary has an absolute right to capital and income once of age | Gifts to children or grandchildren; nominee holdings | Taxed as the beneficiary's; outside the relevant property regime |
| Interest in possession trust | A beneficiary is entitled to the income as it arises, but not the capital | Will trusts giving a surviving spouse income for life | Trustees pay income tax at 20% (dividend income at the dividend ordinary rate); most lifetime trusts of this kind are within the relevant property regime |
| Discretionary trust | Trustees decide who benefits, when and how much | Family wealth across generations; protecting vulnerable or spendthrift beneficiaries | Income taxed at 45% (dividends 39.35%); relevant property inheritance tax charges |
| Trust for a vulnerable beneficiary | Trust for a disabled person or a bereaved minor meeting statutory conditions | Care planning for a disabled child or adult | Special tax treatment can apply if an election is made |
| Settlor-interested trust | The settlor or their spouse or civil partner can benefit | Some property and investment arrangements | Income is usually taxed on the settlor; inheritance tax benefits are often lost |
When trust solicitors in London recommend a structure, they weigh flexibility against tax. A discretionary trust gives trustees the most room to respond to changing family circumstances, but it carries the heaviest tax charges. A bare trust is simple and tax-transparent, but the beneficiary can demand the assets at 18, which many parents and grandparents do not want.
Most trusts pay no income tax on the first £500 of income, but that limit is shared across trusts created by the same settlor. Trustees of most trusts have a reduced capital gains tax annual exempt amount, currently £1,500 for 2026-27, with a higher figure where a beneficiary is vulnerable.
Inheritance tax on trusts: the relevant property regime
Most trusts created during a person's lifetime since March 2006, and discretionary will trusts, fall within the relevant property regime. That regime can charge inheritance tax at three points: when assets go into the trust, at each ten-year anniversary, and when assets leave the trust.
A lifetime transfer into such a trust is chargeable to the extent it exceeds the settlor's available nil-rate band of £325,000, at 20%, with more due if the settlor dies within seven years. At each ten-year anniversary, a periodic charge of up to 6% of the value of relevant property applies, and exit charges arise proportionately when capital is distributed between anniversaries. HMRC's guidance on trusts and inheritance tax sets out when trustees must report.
Three recent reforms affect trust planning. First, since 6 April 2025, whether non-UK assets in a trust are outside the scope of inheritance tax depends on the settlor's long-term UK residence rather than their domicile, which our guide to the non-dom and FIG regime explains. Second, from 6 April 2026, 100% business and agricultural property relief is limited to a capped allowance, with 50% relief above it, which affects trusts holding family company shares or farmland.
Third, unused pension funds are due to come into the estate for deaths from 6 April 2027, which changes whether pension death benefits should be paid into trust; our guide to inheritance tax on pensions covers the detail. Trust solicitors in London are reviewing expression of wish forms and pension trusts for this reason.
A trust deed is written once, but trustees must make decisions under it for decades. The best structures are the ones that can adapt.
How trust solicitors in London set up a trust
- Clarify the purpose. Identify who should benefit, what the settlor wants to protect against, how much control to keep and whether the trust is lifetime or will-based.
- Model the tax. Calculate entry, periodic and exit charges, income and capital gains tax, and the interaction with the settlor's estate, pensions and residence status.
- Choose the trustees. Balance family knowledge with professional skill, consider a protector, and plan for replacement trustees.
- Draft the deed and letter of wishes. Set out the beneficiaries, trustee powers, investment provisions and exclusions, with a non-binding letter of wishes to guide the trustees.
- Transfer the assets. Complete share transfers, Land Registry applications, policy assignments or bank account changes, and file any inheritance tax account.
- Register the trust. Register on HMRC's Trust Registration Service, generally within 90 days of creation or of becoming liable for tax, and keep the record updated.
- Administer and review. Keep accounts, minutes and tax returns, review investments, and diarise each ten-year anniversary well in advance.
Trustee duties, administration and the Trust Registration Service
Trustees must act in good faith, within their powers and for the purposes of the trust. They must not profit from their position or allow their own interests to conflict with the beneficiaries' without authority. Where several trustees act, decisions are normally unanimous unless the deed provides otherwise, and each trustee is responsible for checking what the others do.
Trustees of most UK express trusts, and of some non-UK trusts with UK connections, must register on HMRC's Trust Registration Service, even when no tax is due. Our article on the Trust Registration Service explains which trusts are excluded. Failing to register or update the register can lead to penalties, and registration evidence is commonly requested by banks and other regulated firms.
Good administration is also the trustees' best defence. Clear records of each decision, the information considered and the advice taken make it much harder for a disappointed beneficiary to show a breach of trust. Professional trustees are held to a higher standard of care than lay trustees.
Lay trustees, often family members, frequently ask trust solicitors in London what they are personally exposed to. The answer is that trustees can be personally liable for losses caused by a breach of trust, although the deed may contain an exemption clause and the court has power under section 61 of the Trustee Act 1925 to relieve a trustee who acted honestly and reasonably. Taking advice and recording decisions is the practical protection.
Documents and records to assemble
Trust instruments
The trust deed or will, any deeds of appointment, addition or retirement of trustees, and deeds of variation. Gaps in the chain of trustee appointments are a common problem.
Letters of wishes
The settlor's current letter of wishes and any earlier versions. Trustees should consider these, although they are not legally binding.
Asset records
Valuations, title documents, investment statements, company share registers and loan agreements, with values at creation and each ten-year anniversary.
Tax and registration
TRS registration, self assessment returns for trustees, inheritance tax accounts and records of distributions and tax pools.
Minutes and accounts
Trustee minutes recording decisions and reasons, annual accounts, and evidence of the investment advice taken under the Trustee Act 2000.
Beneficiary information
Up-to-date details of beneficiaries, their residence for tax purposes and any special circumstances such as disability or capacity issues.
Risks and common mistakes
Missing a ten-year anniversary or exit charge
Ten-year anniversary charges are easy to overlook when a trust has been quiet for years. Trustees remain liable for the tax and late filing brings interest and penalties. The calculation depends on the value of the trust property at the anniversary, the settlor's history of gifts in the seven years before the trust was created and any additions since. Trustees should diarise every anniversary from the date of the trust, collect valuations in good time and consider whether distributions before the anniversary would reduce the overall charge. Exit charges on distributions between anniversaries also need to be calculated and reported.
Defective trustee appointments
Trustees are often replaced informally, especially in family trusts. If a new trustee was never properly appointed by deed, or the person who made the appointment had no power to do so, decisions taken since may be open to challenge and assets may be held in the wrong names. The Trustee Act 1925 contains default powers of appointment, but the deed may restrict them. Trustees should check the chain of appointments, sign confirmatory deeds where needed and make sure legal title to every asset has been transferred to the current trustees.
Settlor benefit and gifts with reservation
A trust intended to remove assets from the settlor's estate can fail if the settlor continues to benefit, for example by living in a property held by the trust rent-free or receiving income. Inheritance tax may then be charged as if the assets were still the settlor's, and income tax may be charged on the settlor too. Deeds should exclude the settlor and spouse where appropriate, and the practical arrangements after the trust is created must match the deed. Trust solicitors in London see this problem frequently with family homes.
Investing without proper advice
The Trustee Act 2000 requires trustees exercising the general power of investment to have regard to the standard investment criteria, review investments from time to time and obtain and consider proper advice, unless it is unnecessary in the circumstances. Leaving a large sum in cash for years, or holding a single company's shares without considering diversification, can expose trustees to claims for losses. Where the deed gives wider or narrower powers, those apply. Trustees should document their investment strategy and the advice received.
Beneficiary disputes and removal of trustees
Disputes arise over distributions, information, investment performance and conflicts of interest. Beneficiaries do not have an automatic right to see every trust document, but the court has a supervisory jurisdiction to order disclosure. Trustees facing litigation can apply to the court for directions on whether to sue or defend at the trust's expense. Where trust relationships break down, the court can remove and replace trustees. Proceedings concerning trusts are generally brought under Part 64 of the Civil Procedure Rules in the Chancery Division, and our contentious probate team handles these cases.
If you are a trustee of a trust created by someone who was not UK domiciled, review its inheritance tax position now. Since 6 April 2025 the protection for non-UK assets depends on whether the settlor is a long-term UK resident, and that status can change from year to year. Trusts that were outside inheritance tax may have come within it, with ten-year and exit charges to plan for.
Cross-border trusts: Bangladesh, the Gulf, Singapore and offshore centres
Many London families have assets, trustees or beneficiaries abroad. The law governing the trust, the residence of the trustees for tax purposes and the location of each asset all affect the tax result and how easily the trust can be enforced. A trust that is UK resident for tax purposes is taxed on worldwide income and gains, while a non-resident trust can still be taxed on UK income and on gains from UK land.
For British Bangladeshi families, Bangladesh recognises private trusts under its own Trusts Act, but land in Bangladesh is subject to Bangladeshi law on title and inheritance, including Muslim personal law for Muslim families. A UK trust may not achieve the intended result for Bangladeshi property unless the local position is checked. Our guides on UK wills with Bangladesh assets and inheriting property in Bangladesh explain the interaction, and TRW & Co's Dhaka office advises on the Bangladeshi side.
Families in the United Arab Emirates and Singapore often use local foundations or trust companies, and offshore trusts in Jersey, Guernsey or the Cayman Islands remain common. Where beneficiaries are UK resident, distributions and benefits from non-resident trusts can be taxed under complex matching rules. International private client advice should come before money is moved, not after.
How TRW & Co helps as trust solicitors in London
We act for settlors, trustees and beneficiaries, and for family offices and professional trustees. Our trust work is part of our wider private client practice, and we coordinate with accountants and investment managers so legal, tax and investment decisions are aligned.
Trust creation
Lifetime and will trusts, life policy and pension trusts, and trusts for vulnerable beneficiaries, drafted alongside the client's wills and estate plan.
Trustee support
Advice on powers, appointments and retirements, distributions, investment duties, registration and ten-year anniversary planning.
Restructuring and variation
Appointments out, resettlements, variations under the Variation of Trusts Act 1958 and the winding up of trusts that no longer serve their purpose.
Trust disputes
Claims for breach of trust, removal of trustees and applications for directions. Where advocacy in the higher courts is required, we instruct specialist counsel.
Checklist for settlors and trustees
- Write down what the trust is meant to achieve and for whom.
- Model inheritance, income and capital gains tax before assets are transferred.
- Choose trustees with the skills and time to act, and plan for successors.
- Keep a current letter of wishes and review it after major life events.
- Register on the Trust Registration Service and keep the entry updated.
- Check the chain of trustee appointments and legal title to every asset.
- Diarise each ten-year anniversary and collect valuations early.
- Review trusts affected by the 2025 residence rules and 2026 relief changes.
- Minute trustee decisions, with reasons and the advice considered.
- For assets abroad, check the local law before relying on the UK trust.
To discuss a new trust or an existing one, contact TRW & Co at Holborn Gate, 330 High Holborn, London WC1V 7QH, or by email at info@trw.co. You can see how our trust work fits with our other services on our practices page, or read our guide to inheritance tax planning.
Frequently asked questions
01Why would I set up a trust rather than make an outright gift?
A trust lets you give away assets while keeping control over who benefits, when and how. It can protect young beneficiaries, people who are vulnerable or poor with money, and family wealth on divorce or bankruptcy of a beneficiary. Trusts can also help with inheritance tax planning, although most lifetime trusts are within the relevant property regime and attract their own charges. An outright gift is simpler and cheaper, but once made you lose all control.
02How are discretionary trusts taxed?
Transfers into a discretionary trust during your lifetime are chargeable to inheritance tax at 20% to the extent they exceed your available nil-rate band, with more due if you die within seven years. The trust then faces a charge of up to 6% at each ten-year anniversary and exit charges on capital distributions. Trustees pay income tax at 45%, or 39.35% on dividends, above the first £500 of income, and capital gains tax on disposals with a reduced annual exemption.
03Does my trust need to be registered with HMRC?
Most UK express trusts must be registered on HMRC's Trust Registration Service, even if they have no tax liability. New non-taxable trusts generally must be registered within 90 days of creation, and taxable trusts within 90 days of becoming liable for tax. Some trusts, such as certain will trusts for a limited period and trusts holding pension or life policy benefits, are excluded unless they pay tax. Non-UK trusts with certain UK connections must also register. Details must be kept up to date.
04Can a trust be changed after it has been set up?
Often, yes, depending on the deed. Trustees may have powers to appoint capital, add or remove beneficiaries, or resettle assets onto new trusts. If all beneficiaries are adults with capacity and together entitled to the whole trust fund, they can usually agree to end it. Where some beneficiaries are minors or unborn, the court can approve a variation on their behalf under the Variation of Trusts Act 1958. Each change has tax consequences that should be checked first.
05What can I do if I think a trustee is acting improperly?
Start by asking the trustees in writing for information about the trust and their decisions. Beneficiaries do not have an automatic right to every document, but trustees should provide accounts and core information, and the court can order disclosure. If there has been a breach of trust causing loss, the trustees may be personally liable to restore it. The court can also remove a trustee where the trust is not being properly administered. Early legal advice is important because time limits may apply.
06How did the April 2025 non-dom changes affect trusts?
Before 6 April 2025, non-UK assets in a trust created by a non-UK domiciled settlor were generally excluded property, outside inheritance tax. Under the new rules, that protection depends on whether the settlor is a long-term UK resident, broadly someone UK resident for 10 of the last 20 tax years. If the settlor becomes a long-term resident, the trust's non-UK assets can come within the relevant property regime. Transitional rules apply to some existing trusts, so each trust needs individual review.
07Are trusts recognised in Bangladesh?
Bangladesh recognises private trusts under its own trust legislation, but land and other assets in Bangladesh are governed by Bangladeshi law on title, registration and succession. For Muslim families, Muslim personal law rules on inheritance may affect what can be achieved. A UK trust deed purporting to deal with Bangladeshi land may not be effective without local steps. TRW & Co's London and Dhaka offices work together to align UK trusts with Bangladeshi law.
Sources and official materials
- Trusts and taxes — HMRC guidance on trust types and their taxation
- Trusts and Income Tax — Trust rates and the £500 limit
- Trusts and Inheritance Tax — Entry, ten-year and exit charges
- Register a trust as a trustee — Trust Registration Service deadlines
- Trustee Act 2000 — Duty of care and investment powers
- Trustee Act 1925 — Maintenance, advancement and appointment of trustees
- Perpetuities and Accumulations Act 2009, section 5 — The 125-year perpetuity period
- Trusts and Succession (Scotland) Act 2024 — Reform of Scots trust law
General information only, current as at 21 October 2026. It is not legal advice and does not create a solicitor–client relationship. It reflects the law of England and Wales unless stated otherwise; Scotland and Northern Ireland have separate legal systems, and the law changes frequently. Check current official sources and take advice on the facts of your matter.