Trust planning is rising again - here’s what trustees should consider

Recent changes to inheritance tax have prompted many individuals to revisit lifetime gifting strategies, bringing trusts back into sharper focus.

Used effectively, trusts can allow a settlor to retain control over investments while influencing how and when beneficiaries receive assets. However, establishing a trust carries legal, tax and administrative responsibilities that must be carefully considered from the outset.

A range of structures exists to meet different planning needs. Some can even provide the settlor with access to capital and/or an income stream without triggering a gift with reservation.

That said, it is essential to understand the key compliance and practical considerations before proceeding.

Registering a trust

Most trusts in the UK are now subject to formal registration requirements.

New trusts must generally be registered with HMRC’s Trust Registration Service (TRS) within 90 days of creation. Many existing arrangements will also need to be registered, and certain non-UK trusts holding UK assets may fall within scope.

Designated accounts set up for minor children or grandchildren, where held within a trust structure, will typically also require registration. This does not include standard bank accounts held in a child’s own name, Child Trust Funds or Junior ISAs, which are not subject to Trust Registration Service requirements.

Where a trust holds assets in another jurisdiction, additional reporting obligations may arise. For example, a trust registered on the TRS that holds an offshore investment bond issued in Ireland must also be registered on Ireland’s Central Register of Beneficial Ownership of Trusts (CRBOT).

It is the responsibility of those acting as trustees to ensure that registration is completed correctly and that all information remains up to date. While some structures may be exempt, rules vary between jurisdictions, and professional advice is often required to ensure compliance. Failure to meet these obligations can result in penalties.

Trustee bank accounts

In practice, trustees will often need to operate a dedicated bank account.

While this may not be required at the outset, for example where an investment bond is placed into a trust, it is likely to become necessary over time. This is particularly the case where cash distributions are made to beneficiaries.

If trust assets generate income, a bank account will typically be needed to receive and distribute that income, as well as to meet any tax liabilities.

A trustee account may also be required in more specific scenarios. For example, where a protection policy is written under a bare trust and the aim is to secure potentially exempt transfer (PET) treatment on the full premium, this can be achieved by transferring cash to the trustees for them to pay the premiums.

Trustees’ duties and investment responsibilities

Those acting as trustees are responsible for administering the arrangement in the best interests of the beneficiaries. A key part of this role is ensuring that assets are invested appropriately.

When exercising their investment powers, trustees must:

• Meet their statutory duty of care
• Consider the standard investment criteria, including diversification and suitability
• Take appropriate professional advice when making or reviewing investment decisions

Investment strategies should reflect the needs and circumstances of the beneficiaries.

For example, where medium to long-term capital growth is the priority, an investment bond can offer a tax-efficient solution. Discretionary trusts are typically subject to income tax rates of 45% or 39.35% for dividend income. As a non income producing asset, an investment bond can help mitigate these higher rates while still allowing tax efficient access to capital through the 5% cumulative withdrawal allowance and the ability to assign segments to beneficiaries prior to encashment.

Where income is required for one beneficiary, alongside capital growth for others, collective investments that produce income may be more appropriate. These can facilitate income distributions while allowing trustees to make use of the capital gains tax annual exempt amount, currently up to £1,500, to reduce gains on encashment.

In contrast, an investment bond would not be suitable in this scenario, as it does not generate income.

Legal entity identifiers (LEIs)

Trusts that invest on behalf of beneficiaries may need to obtain a legal entity identifier, or LEI.

An LEI is a unique reference number required when making certain types of investments. Most trusts, other than bare trusts, that hold an investment portfolio will need one.

An LEI is not typically required where the trust only holds investment bonds invested in life assurance funds or collective investments. However, where trustees invest directly in listed collectives, an LEI may be necessary. In practice, many trustees obtain one regardless, as it is often required by investment providers to facilitate transactions.

Supporting trustees over the long term

Establishing a trust is only the beginning. Ongoing administration, investment oversight and regulatory compliance all require careful attention, often over many years.

At The Private Office, we have extensive experience supporting trustees across a wide range of trust structures. Our advisers work closely with clients to help ensure trusts are established correctly, remain compliant with evolving legislation, and continue to meet the needs of beneficiaries over time.

Whether you are considering setting up a trust or require ongoing support in your role as trustee, we can provide clear, practical guidance at every stage. Contact us to arrange a free initial consultation.

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The Financial Conduct Authority does not regulate tax planning, estate planning or trusts.

The information contained within this article is for guidance only and does not constitute legal or financial advice which should be sought before taking any action or inaction. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.

The information in this article is correct as at 16/04/2026.