What is a Trust?
A trust separates legal ownership of money or property from the benefit of it. One or more trustees hold and manage the assets, but the value is held for somebody else, the beneficiary, whether that's a child too young to manage an inheritance, a family member who needs support with money, or someone who has just received a compensation award.
Not all trusts work the same way. The simplest, a bare trust, is barely a trust at all in practical terms, the beneficiary is entitled to the assets outright and the trustees hold them on their behalf. A discretionary trust is more involved: the trustees decide when and how funds are released, which suits situations where a fixed entitlement wouldn't be appropriate.
We advise on which structure fits your circumstances, then draft the trust deed and register it correctly. Just as often, we're asked to take over administering a trust that already exists, sometimes one set up by a will decades ago that's never had a proper review.
Trust creation can happen in different ways. Some trusts are set up during your lifetime, when you establish one yourself or receive a compensation award. Others, sometimes called testamentary trusts, are created through the terms of a will and only take effect once you've died. Scots trust law treats these differently in places from other parts of the UK, which is another reason local advice matters.
Situations Where a Trust Might Help
A trust can be the right answer in a range of circumstances, including:
- Receiving a personal injury or clinical negligence settlement
- Providing for a young beneficiary under a will
- Giving someone a life interest before assets pass on
- Supporting a family member who needs help managing money
- Protecting a vulnerable beneficiary's inheritance
- An existing family trust that's never been registered
- Reviewing an old trust set up decades ago
- Holding assets set aside for long-term tax planning
- Acting as a trustee for the first time
Whatever's brought you to this point, whether you're setting up a trust from scratch or picking up responsibility for one that already exists, our team can help you get it right.
Do You Need a Trust Solicitor?
You'll likely benefit from advice if any of the following apply:
- You're setting up a trust for the first time
- You've been asked to act as a trustee
- Your trust has never been registered with HMRC
- You're not sure what your trust deed actually allows
Trusts look simple from the outside, but the rules around them are anything but. What you can hold in a trust, how it's taxed, and what a trustee is personally responsible for all depend on the type of trust involved, and getting the wrong structure in place can be expensive to unpick later. That's why understanding the legal risks of getting the trust structure wrong matters as much as anything else.
Doing it properly means choosing the right form of trust for the circumstances, drafting a deed that reflects it accurately, registering the trust with HMRC, and keeping records and reporting up to date for as long as the trust exists.
Get it wrong, and the consequences fall on the trustees personally, not just the beneficiary. Every trust in the UK now has to be registered with HMRC, whether or not it earns any income, and penalties apply where it isn't. Getting legal advice early, before you're committed to a structure, is usually the difference between a straightforward trust and a difficult one.
Types of Trusts We Advise On
Personal Injury Trusts
If you've received compensation following an injury, placing it in a trust protects your entitlement to means-tested benefits and gives you support managing the money day to day. It's specialist enough that we've written about it separately, read more on our Personal Injury Trusts page. Personal injury compensation held in a trust fund like this stays protected from means-testing while it's managed on your behalf.
Trusts Set Up by a Will
Many of the trusts we administer were created by somebody's will, often to provide for a beneficiary who was too young to inherit outright, or to give one person the use of an asset for their lifetime before it passes to someone else. Some of these trusts are decades old.
Discretionary Trusts
Here, trustees decide how and when to release funds to beneficiaries, rather than each person having a fixed, guaranteed share. It suits situations where circumstances might change, such as protecting a vulnerable beneficiary, but it comes with more complex tax treatment than a straightforward trust. When a discretionary trust ends, the trustees oversee its termination and the distribution of assets to beneficiaries, which can raise questions of its own.
Bare Trusts
The most straightforward form. The beneficiary is legally entitled to the trust's assets, and the trustees simply hold and manage them on that basis. Most of the personal injury trusts we set up take this form, it's simple to establish and administer.
Older Family Trusts
We still look after trusts set up long before current rules existed, sometimes decades before HMRC's registration requirements came in. If you're a trustee of one of these and aren't sure whether it's compliant, it's worth having it reviewed rather than assuming it's fine. As family trust solicitors, we're often the first to spot when an old trust needs bringing up to date.
What Does Trust Administration Involve?
How much administration a trust needs varies enormously. At one end, we're in touch with a family every week, releasing funds for care or specialist equipment and making sure everything a trust is meant to provide is actually reaching the person it's for. At the other, it's a once-a-year check that accounts and records are up to date.
Every trust registered with HMRC needs to stay that way, with details kept current as circumstances change. Depending on the type of trust, there can be income tax, capital gains tax, property tax and inheritance tax questions to work through, and the right answer depends on the specific trust you've got, not a general rule. The tax implications alone can be complex, and getting the tax liabilities wrong is an expensive mistake to unpick later.
We can take on as much of this as you need, from handling it entirely to supporting a family member who's acting as trustee alongside us. Where the tax position needs specialist input, we'll bring in an accountant or financial adviser rather than guess at it.
How We Can Help
Setting up a trust, or taking over administration of one that already exists, brings decisions that are difficult to unwind once they've been made, and rules that carry real consequences if they're got wrong. We can:
- Advise on the right type of trust for your circumstances
- Draft trust deeds that reflect exactly what you need
- Register new and existing trusts with HMRC
- Act as trustee, alongside you or on your own
- Review older trusts to check they're still compliant
- Handle annual accounts, records and reporting
- Liaise with accountants and financial advisers where needed
- Support trustees making one-off, significant decisions
You'll have one named point of contact throughout: someone who knows your trust and your circumstances in detail, rather than a different person picking up the file every time you call. We work at your pace, whether that means weekly contact for a trust with more going on, or a straightforward annual check-in.
Where a trust sits alongside wider estate or Inheritance Tax planning, or a property needs transferring into it, our in-house conveyancing and private client teams work on it together, so you're not left instructing a separate firm for each part of the process.
And if you're taking on a trust that's existed for years without much attention, we'll start by working out exactly where it stands: whether it's registered correctly, what's been reported, and what, if anything, needs putting right before we move forward.
Frequently Asked Questions
A trust is a way of holding money or property for someone else's benefit. One or more trustees legally own and manage the assets, but the value is there for the beneficiary, whether that's a child, a family member who needs support, or someone managing a compensation award. The trustees are bound to act in the beneficiary's interests, not their own. People often call this a trust fund, though the legal mechanics are the same whatever term's used.
In almost every case, yes. Since the rules changed, most trusts have to be registered with HMRC's Trust Registration Service, whether or not the trust earns any income. This applies even to something as simple as a house held in trust. Missing this isn't a technicality, penalties can follow, so it's worth checking if you're not certain.
Almost anyone over 18 can act as a trustee, including family members, friends, or a solicitor. Most trusts have two or three trustees rather than one, so decisions aren't left to a single person. We can act as trustee ourselves, alongside family, or take on the role entirely, depending on what suits your circumstances.
It depends entirely on the trust. Some need weekly attention, releasing funds and keeping in close contact with the family. Others just need an annual check that accounts and records are up to date. Every trustee has to keep proper records, act in the beneficiaries' interests, and stay on top of reporting obligations, including HMRC registration. Part of that job includes keeping trust documents in order and staying on top of wider legal obligations, not just the paperwork HMRC asks for.
In a bare trust, the beneficiary is legally entitled to the assets outright, and the trustees simply hold them on that basis, it's the more straightforward form. In a discretionary trust, the trustees decide when and how much to release, which suits situations where a fixed, guaranteed entitlement wouldn't be appropriate.
We can register a trust that holds a property, and handle the transfer of the property into it correctly. Ongoing management of a home held for asset protection tends to be limited, once it's registered and transferred, there's little else to administer unless circumstances change. We're happy to talk through whether this is the right approach for you. Trust property like a family home still needs proper title work when it's transferred in, which is where our conveyancing services come in.
Yes. We often act as trustee alongside family members, particularly where a trust needs to run for many years or where decisions might be difficult for family alone to make. We can also take on the role entirely if that's what you'd prefer.
Why choose Drummond Miller?
Trusts touch on tax, compliance and family circumstances all at once, so it helps to work with a team that handles every part of it. We have:
- Over 25 years administering wills, trusts and executries
- Full in-house service, including conveyancing and estate agency
- 8 offices across the central belt
- One named contact throughout, not a rotating team
- Fees based on the work actually done
- Proactive about flagging compliance issues before they become penalties
We're one of a small number of Scottish firms offering every legal service in-house, so when a trust needs a property transferred or ties into wider estate planning, it's handled by colleagues down the corridor rather than a separate firm you have to instruct and brief from scratch. Whether that's will drafting that includes a trust, estate administration a trust's come out of, or looking after the trust itself, it's all handled under one roof.
We know trusts have a reputation for being complicated, and that clients are often more worried about getting something wrong than about the process itself. Our job is to make sure they don't have to carry that worry alone. Where a trust needs to sit alongside wider estate planning or Inheritance Tax advice, we bring in the same team for that conversation too.
Speak to Our Trust Solicitors
If you're setting up a trust, taking on one that already exists, or just want to check an old one is still compliant, talk to our private client team today.
- Call us on 0131 226 5151