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Setting Up a Trust: What You Need to Know Before You StartWritten on May 29, 2025 by Kirk Rice LLP

Trusts can be a valuable tool when it comes to protecting wealth and planning for the future. Whether you want to support your family, manage assets tax-efficiently or take control over how your estate is handled, a trust could be the right option. But how do you go about setting one up?

This article explains what’s involved in setting up a trust in the UK, what it might cost, and why expert advice matters.

Why set up a trust?

A trust can give you greater control over how your assets are used—both during your lifetime and after your death. For many people, it’s a way to protect wealth, support family members, and reduce inheritance tax exposure.

Trusts are often used to ring-fence assets for children or grandchildren, provide for vulnerable individuals, or plan around complex family structures. They can also help avoid delays and disputes during estate administration by making your intentions legally binding and easier to manage.

What’s the purpose of the trust?

Before setting up a trust, it’s important to be clear on your goals. Are you looking to:

• Provide for children or grandchildren?
• Support a vulnerable beneficiary?
• Plan ahead for inheritance tax?
• Keep control over how and when assets are distributed?

Knowing the purpose helps determine the right type of trust and ensures it meets both legal and tax requirements.

Choosing the right type of trust

There’s no one-size-fits-all solution. The type of trust you choose will affect how it’s taxed and managed. Common types include:

• Bare Trusts – often used for gifts to minor children, where the beneficiary gains full access at age 18.
• Discretionary Trusts – offer flexibility, allowing trustees to decide how and when assets and income are distributed.
• Interest in Possession Trusts – provide someone with income from the trust while preserving capital for remaining capital beneficiaries.

Choosing the wrong structure can create unwanted tax consequences, so it’s important to seek professional guidance.

Who can set up a trust?

Anyone with legal capacity can set up a trust in the UK. This person is known as the settlor. They decide how the trust should be set up, who the trustees and beneficiaries will be, and what assets are placed into the trust.

Trustees take on legal responsibility for managing the trust. It’s essential to choose people who are willing and capable of handling this responsibility. In many cases, clients appoint professional trustees to ensure everything is properly managed.

What does it cost to set up a trust in the UK?

The cost of setting up a trust can vary widely depending on how complex your arrangements are and the type of support you need. Typically, there will be legal fees for drafting a trust deed that clearly sets out the terms. If tax planning is involved, you may also need advice from a financial planner or tax adviser to ensure the structure is efficient. On top of that, some trusts involve ongoing administration or trustee services, which can carry additional charges.

While DIY options or online templates might seem cheaper, they often lack the tailored advice needed to avoid mistakes—mistakes that can be expensive to fix later.

Tax considerations when creating a trust

Creating a trust can have tax consequences, depending on the type of trust, the assets involved and how it’s structured. For example, some trusts are subject to inheritance tax charges when they’re set up, as well as potential periodic or exit charges in future. Income generated within the trust may also be taxed differently depending on who benefits and how the trust is managed.

If assets like property or shares are transferred into a trust, that might trigger a capital gains tax bill, even if the settlor doesn’t receive any money from the transfer. Because the rules are complex and the financial impact can be significant, it’s important to get professional advice before proceeding.

Trust deed and registration

A trust must be created by a legal document known as a trust deed, which sets out the rules of the trust. This should be drafted by a legal professional to avoid ambiguity or legal issues later on.

Once set up, most trusts must be registered with HMRC via the Trust Registration Service (TRS). Registration deadlines apply, and there may be penalties for non-compliance.

Ongoing management: don’t set and forget

Trustees have ongoing duties, including:

• Filing trust tax returns where required
• Keeping accurate records
• Making decisions in line with the trust deed

Trusts are not a one-off arrangement—they need to be actively managed and regularly reviewed.

Get in touch with Kirk Rice’s trust specialists

Setting up a trust in the UK involves more than filling out a few forms. It’s a strategic decision that should align with your financial goals and family plans. While it’s possible to set up a trust without advice, most people benefit from expert input to ensure the structure is right and the tax implications are properly handled.

If you’re thinking about creating a trust for estate planning, supporting your family, or protecting your assets, we can help you get it right from the start.

Get in touch with us at info@kirkrice.co.uk to explore whether a trust is right for your situation.

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Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. The information is based on current tax legislation which may change in future. The FCA does not regulate tax and trust advice.