How to Set Up a Family Trust in the UK

A family trust is one of the most powerful tools available in UK estate planning — but setting one up correctly requires more than drafting a deed and hoping for the best. Most trusts that face legal challenge later were not set up wrongly; they were maintained wrongly. This guide explains every step of the process, including the parts most families overlook.

Step 1 — Choose the Right Trust Type

The first decision is the most important: what kind of trust do you need? The most common options for UK families are the discretionary trust, the bare trust, the interest in possession trust, and the life interest trust.

A discretionary trust gives trustees the widest flexibility — they decide how, when, and to whom income and capital are distributed. This makes it the preferred structure for families who want to protect assets across generations while retaining control.

Step 2 — Appoint Your Trustees

The trustees are the legal owners of the trust assets and bear full fiduciary responsibility for how those assets are managed. Choosing the right trustees is arguably more important than the trust deed itself.

You need at least one trustee, but it is strongly advisable to appoint at least two — particularly for property-holding trusts. A corporate trustee (a trust company) can provide continuity if individual trustees retire or die.

Step 3 — Draft and Execute the Trust Deed

The trust deed is the foundational document of the trust. It records the settlor's intentions, defines the trust type and terms, identifies the trustees and beneficiaries, and sets out the trustees' powers.

For most UK family trusts, the deed should be prepared by a solicitor experienced in private client law. It must be executed as a deed — meaning it must be signed in the presence of a witness, dated, and delivered. For trusts involving land or property, additional requirements apply.

Step 4 — Register the Trust

Since 2022, most UK trusts must be registered with HMRC's Trust Registration Service (TRS) within 90 days of creation. Failure to register can result in financial penalties.

The registration captures details of the trust, the trustees, the settlor, and the beneficial owners. Certain trusts are exempt — including bare trusts for bereaved minors and trusts holding only life assurance policies — but most family discretionary trusts must be registered.

Frequently Asked Questions

How much does it cost to set up a family trust in the UK?

Solicitor fees for drafting a family trust deed typically range from £1,500 to £5,000 depending on complexity. There may also be stamp duty land tax on any property transferred, plus ongoing accounting costs for trust tax returns.

Do I need a solicitor to set up a family trust?

You are not legally required to use a solicitor, but it is strongly advisable. Errors in the trust deed or the execution process can invalidate the trust entirely, with significant financial and legal consequences.

How long does it take to set up a family trust?

The process typically takes four to twelve weeks from initial advice to executed deed, depending on the complexity of the trust, the assets involved, and the speed of the parties. Trust registration with HMRC must then follow within 90 days.

Can I be both the settlor and a trustee of my own trust?

Yes, in most cases. However, a settlor who is also a trustee should take care that the arrangement does not make the trust a 'settlor-interested trust' for tax purposes, which has different tax treatment.