When considering arrangements that will safeguard your family’s future, you may have heard about the idea of placing your house in trust. But what does it really mean? Is it the right move for you? Would it shield your assets from care fees, delays in probate or complexities around inheritance tax?
In this extended guide we cover how to put your house in trust from all angles – covering and addressing your natural concerns and qualms, helping you to make an emotionally confident decision, and delivering precisely what readers like yourself have typed into their browser this morning.
What Does “Putting Your House in Trust” Abingdon-on-Thames Actually Mean?
Putting your house in trust means transferring legal ownership of your property into a trust arrangement. Instead of the house being in your name alone, it is held by trustees (who can also be you) for the benefit of your chosen beneficiaries.
In simple terms:
- You still live in and use your house as normal.
- Legally, the property is owned by the trust.
- Upon your death (or in some cases earlier), the house passes to your beneficiaries without going through standard probate.
Example
Imagine you own a house worth £350,000. Instead of leaving it solely in your will, you decide to place it in a trust while you are alive. You appoint your children as beneficiaries and your solicitor as a trustee. After your death, your home passes directly to your children via the trust without needing to go through probate.
Why Do People Think About Putting Their House in Trust Abingdon-on-Thames?
Many of our clients at Will 4 Less ask about putting their house in trust for reasons such as:
Avoiding Probate: Assets held in trust usually do not go through probate, ensuring a smoother and quicker transfer to your beneficiaries.
Reducing Inheritance Tax: Depending on how the trust is structured, it can reduce the inheritance tax burden on your estate.
Protecting Against Care Home Fees: Some believe putting their house in trust will protect it from being assessed for care home fees.
Maintaining Control: Trusts can ensure your wishes are carried out exactly as intended, especially if you have complex family situations.
However, it is essential to understand that each reason has legal, tax, and practical implications that need careful consideration.
How Does Putting Your House in Trust Abingdon-on-Thames Actually Work?
Putting your house in trust involves:
1. Choosing the Right Type of Trust: For example, a life interest trust, discretionary trust, or bare trust. Each has different rules on who benefits and how.
2. Appointing Trustees: People or professionals who manage the trust’s assets according to its terms.
3. Transferring the Property: This involves legal paperwork to transfer ownership from you to the trust.
4. Understanding Tax Implications: For instance, gifts into trusts can be subject to inheritance tax if you die within seven years, and certain trusts attract ten-year periodic charges.
5. Ensuring It Matches Your Estate Plan: A trust should not conflict with your will or other asset distribution intentions.
What Types of Trusts Are Used for Putting Your House in Trust Abingdon-on-Thames?
Here are the most common types:
Life Interest Trusts (Interest in Possession Trusts)
- Allows a partner or spouse to live in the house for life.
- After their death, it passes to children or other beneficiaries.
- Trustees decide how and when to distribute the property among beneficiaries.
Bare Trusts
- Beneficiaries have an immediate and absolute right to the house once in trust.
- Often used in wills to protect a share of the house for children while allowing a surviving spouse to live there.
Each type of trust has legal and tax implications, so professional guidance is essential when putting your house in trust
What Are the Benefits of Putting Your House in Trust Abingdon-on-Thames?
Avoiding Probate
Putting your house in trust can allow the property to bypass probate completely, saving time and potential legal costs for your loved ones.
Potential Tax Benefits
If structured correctly, putting your house in trust may reduce inheritance tax liabilities. However, this area is highly technical and requires professional advice to ensure compliance with HMRC rules.
Protection from Care Fees
Some people use trusts to prevent their home being sold to pay for care. However, local authorities can challenge this under “deliberate deprivation of assets” rules if they believe the trust was set up purely to avoid care costs.
Control Over Distribution
You can specify exactly who will benefit from your home, when, and under what circumstances, avoiding family disputes.
What Are the Drawbacks of Putting Your House in Trust Abingdon-on-Thames?
Loss of Direct Ownership
Technically, you no longer own your house, which can feel unsettling.
Complex Tax Implications
Depending on the trust type, there may be immediate charges like Stamp Duty Land Tax or ongoing charges like the ten-yearly IHT charge.
Deliberate Deprivation Risks
As explained earlier, if the council believes you placed your house in trust to avoid care fees, it may still assess your home’s value in means testing.
Costs of Setting Up and Maintaining the Trust
Legal fees, annual trust tax returns, and administration costs can be significant.
Does Putting Your House in Trust Help Avoid Care Home Fees?
This is one of the most common queries we receive at Will 4 Less. The honest answer is:
✔️ Sometimes, but not always.
If you set up a trust purely to avoid paying care home fees, local authorities may treat it as “deprivation of assets” and still include your home in their financial assessment. However, if the trust is set up for genuine estate planning reasons, and not solely to avoid care fees, it may still achieve some protection.
Always seek tailored legal advice before proceeding.
How Does Putting Your House in Trust { Name} Affect Inheritance Tax?
Inheritance tax (IHT) is a concern for many. Here’s how putting your house in trust might affect it:
- If you continue to live in the house rent-free after placing it in trust, it may still be included in your estate for IHT purposes as a ‘gift with reservation of benefit’.
- Some trusts can create an immediate chargeable lifetime transfer if the value exceeds your nil rate band (£325,000).
- Discretionary trusts or life interest trusts can provide IHT planning opportunities but must be structured correctly to avoid unintended tax liabilities.
This is why professional advice is vital.
Is Putting Your House in Trust the Same as Gifting It to Your Children?
No. Putting your house in trust is different from gifting it outright to your children. With a gift:
- You lose full legal control immediately.
- It may create capital gains tax implications if they sell it in the future.
- Your children’s financial issues (e.g. divorce, bankruptcy) could risk your home.
A trust offers a structured way to keep some control and protection while planning for your family’s future.
Is Putting Your House in Trust Abingdon-on-Thames the Same as a Will?
No. Putting your house in trust is different from simply mentioning your house in your will. A will only takes effect after death, while a trust can take effect during your lifetime or upon death, depending on how it is set up.
For many people, a will with a property protection trust clause is enough to protect the family home after the first spouse dies. However, some prefer lifetime trusts for specific tax or family planning reasons.
Can You Still Live in Your House After Putting It in Trust Abingdon-on-Thames?
Yes. Most people who put their house in trust arrange it so they can remain living there rent-free for life. This depends on the trust structure. However, you should understand that you no longer legally own the property, which can impact future decisions like re-mortgaging.
How Do You Go About Putting Your House in Trust Abingdon-on-Thames?
The process involves:
Specialist Advice Session
Discuss your goals with a wills and trusts expert to confirm if this is right for you.
Selection of Trust Type
Choose the correct trust to align with your objectives.
Drafting Trust Deed
A legal document transferring the property into trust and setting out trustee powers.
Property Transfer Registration
Update the Land Registry to reflect trust ownership.
Ongoing Administration
Trustees must maintain records, tax returns, and compliance with trust law.
At Will 4 Less, we guide clients through each stage to ensure clarity and peace of mind.
What Do Experts Say About Putting Your House in Trust Abingdon-on-Thames?
Legal and financial experts often emphasise:
- It is a powerful estate planning tool when used for the right reasons.
- It is not a guaranteed way to avoid care fees.
- It helps protect your children’s inheritance, especially in blended families.
- It can have significant tax implications if poorly implemented.
Bottom Line: Should You Put Your House in Trust?
Transferring your home to trust may be a wonderful approach to ensuring your loved ones’ futures, limiting stress after your death and preserving harmony in your family. But it needs to be done for true estate planning reasons with specific professional advice to avoid tax, care fee, or law of unintended consequences.
At Will 4 Less, our specialists can explain your options in simple, human terms and design a plan that truly reflects your goals.
➔ Contact us today to find out if putting your house in trust is right for you and your family.