At Winkworth, we know that property ownership is not just about where you live — it’s about how you protect your assets for the future.
As London’s property landscape becomes increasingly complex, more homeowners are exploring the use of property trusts to manage succession, mitigate tax, and safeguard family wealth.
But while a trust can be a powerful tool, it also demands careful planning. Recent headlines have shown that even high-profile figures can fall foul of complicated rules — highlighting why expert advice is essential before taking this step.
Here’s what every London homeowner should know about how property trusts work, who they suit, and the potential risks involved.
What Is a Property Trust?
A property trust is a legal structure designed to hold assets on behalf of one or more beneficiaries. The property is transferred to trustees, who manage it according to a Trust Deed — a document that sets out how and when the beneficiaries may benefit.
Trusts are often used as part of estate planning to protect family homes, simplify succession, and potentially reduce exposure to inheritance tax (IHT).
Why Set Up a Property Trust?
There are several reasons why London property owners may consider placing a home or investment property into a trust:
- Smooth succession planning: Trusts help avoid delays and additional costs associated with probate.
- Protection for dependents: They can safeguard homes for children, spouses, or vulnerable family members.
- Flexibility through life changes: Trusts can simplify asset management during divorce, remarriage, or periods of incapacity.
- Protection from creditors: In some cases, trusts can help protect assets from claims in bankruptcy or litigation.
How Property Trusts Work
A trust involves three key roles:
- The Settlor: The person who sets up the trust and transfers the property.
- The Trustee(s): The individual(s) responsible for managing the trust and ensuring its terms are followed.
- The Beneficiaries: Those who will benefit from the trust — often family members or heirs.
Setting up a trust typically involves the following steps:
- Drafting the Trust Deed with a qualified solicitor.
- Appointing trustees who can act responsibly and in the beneficiaries’ best interests.
- Transferring legal ownership of the property into the trust.
- Registering the trust with HMRC in compliance with anti-money laundering regulations.
Risks and Considerations
While property trusts can be advantageous, they come with certain challenges:
- Reduced control: Once a property is in a trust, you no longer own it directly.
- Tax exposure: If the settlor dies within seven years of creating the trust, inheritance tax may still apply.
- Ten-year charges: Trusts with assets above the IHT threshold may face periodic tax assessments.
- Administrative complexity: Trusts incur ongoing legal, tax, and management costs.
Who Should Consider a Property Trust?
A trust might suit you if you:
- Want to reduce inheritance tax on a high-value estate.
- Need to protect assets for children or dependents.
- Wish to prevent family disputes over succession.
- Want to separate personal and business property holdings.
For those with significant London assets — particularly in prime or multi-generational estates — a trust can form a cornerstone of a well-structured wealth plan.
Professional Management of Trust Properties
Properties within trusts often need more than just basic upkeep — they require expert management.
Winkworth’s London offices can assist with:
- Compliance: Ensuring all required safety certificates, licences, and documentation are in order.
- Tenant management: Handling lettings, deposits, inspections, and void periods.
- Maintenance: Coordinating repairs, renovations, and upkeep to preserve long-term value.
- Tax coordination: Working alongside accountants and legal advisers to ensure trust-held properties meet HMRC obligations.
In Summary
Property trusts can provide significant benefits for succession planning and asset protection, but they must be handled with care. Legal and financial advice is essential to ensure the structure works in your best interests and remains fully compliant.
At Winkworth, we combine local expertise with national and international reach, helping London homeowners protect their property portfolios through every stage of ownership.
If you’d like to explore whether a property trust could work for your situation — or need help managing a trust-held home — contact your nearest Winkworth office for tailored guidance.
Source: Benham & Reeves
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