Do you need probate if there is a trust?
Assets properly held in a trust before death are not part of the estate and need no grant. The question is what was actually in the trust, and what was left outside it.
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The short answer
- Assets already in a trust when the person died belong to the trustees, not the estate. No grant is needed for them. The trustees carry on under the trust deed.
- Anything not in the trust is tested in the usual way: sole-name property or a sole-name account above the holder's limit means a grant.
- A trust created by the will (a will trust) is the opposite case: the grant is what lets the executors pass the assets to the trustees.
- When the life tenant of a life interest trust dies, the trust assets pass under the trust, not the will, but they are still counted in the life tenant's estate for inheritance tax.
- Check what was really transferred. Many "asset protection" trusts were set up but never properly funded, and a house still registered in the person's name is not in trust.
Trusts set up during the person's lifetime
If the person transferred assets into a trust while alive (a discretionary trust for grandchildren, a bare trust, a life policy in trust, or one of the "family protection" or "asset protection" trusts that have been widely sold), those assets belong to the trustees. On the settlor's death nothing happens to the trust: the trustees continue to hold and manage the assets under the deed. There is no grant because the estate does not own them. The trustees may need to tell HMRC, because some lifetime trusts have their own inheritance tax charges, but that is a trust matter, not a probate one.
The exception that trips people up is a trust that was set up but never funded. A house that was meant to go into a family protection trust is in trust only if the Land Registry title was actually changed to the trustees' names. If the register still shows the deceased as proprietor, the house is in the estate and a grant is needed to deal with it. Check the title (£7 for an official copy) before assuming.
Note also that HMRC often treats a home given to a trust while the giver carried on living in it as still part of their estate for inheritance tax (a "gift with reservation of benefit"). That does not change the probate position, which follows the legal ownership, but it changes the tax.
Trusts created by the will
A will may leave assets on trust: for children until they reach 18 or 25, for a disabled beneficiary, for a surviving spouse for life, or as a discretionary trust for the family. At the moment of death those assets are still the deceased's. The executors need a grant to collect them, and then transfer them to the trustees (often the same people wearing a different hat). So a will trust makes a grant more likely, not less: even where no bank would have insisted, the executors usually need the grant to vest property or investments in the trustees properly.
Life interest and property trusts on the second death
The most common trust families meet is the one in a couple's wills: the first to die leaves their share of the home (held as tenants in common) on trust for the survivor to live in for life, with the share passing to the children afterwards. When the survivor dies, two things happen at once.
- The trust share passes to the children under the first will's trust. The trustees deal with it; it is not part of the survivor's estate for probate and the survivor's executors do not need a grant to deal with it (though in practice the same people often hold both roles and one grant covers the survivor's own share).
- The survivor's own share and everything else in their name pass under the survivor's will, and a grant is almost always needed because the home is now in a sole name.
For inheritance tax, the trust share is added to the survivor's estate because they had a life interest in it, so the values from the first death matter. See tenants in common for the ownership side.
What to do
- Find the trust deed and identify the trustees. The solicitor who set it up will have a copy.
- Establish what is in the trust from the Land Registry, the policy documents or the investment account, not from what the deed says was meant to be transferred.
- List what is outside the trust and apply the ordinary test to it with our checker.
- If there is a will trust, expect to need a grant and to register the trust with HMRC's Trust Registration Service once it is funded.
Common questions
Do you need probate if a house is in trust?
Not if the house was actually transferred to the trustees during the person's lifetime, so that the Land Registry title is in the trustees' names. The house is then outside the estate. If the title is still in the deceased's name, the house is not in trust for this purpose and a grant is needed to sell or transfer it.
Does a living trust avoid probate in the UK?
'Living trust' is an American term. A UK lifetime trust holding assets does take those assets outside the estate, so no grant is needed for them. Anything left outside the trust is tested in the ordinary way, and setting up such a trust has inheritance tax consequences that should be understood before relying on it.
Do I need probate if there is a trust in the will?
Usually yes. A will trust has no assets until the executors put them in, and the executors need a grant to collect the assets and transfer them to the trustees. A will trust tends to make a grant more likely rather than less.
What happens to a life interest trust when the life tenant dies?
The trust assets pass to the remainder beneficiaries named in the original trust, usually children, under the trustees' authority. The life tenant's executors do not need a grant for the trust assets, but they will normally need one for the life tenant's own estate. The trust assets are added to the life tenant's estate for inheritance tax.
Do you need a grant of probate for a life interest trust?
Not for the assets already in the trust. A grant is needed for the life tenant's own assets if they exceed the usual limits or include sole-name property, which after the first death they almost always do.
Related guides
Important
Solace is not a firm of solicitors and does not provide legal, tax or financial advice. We are an estate administration service and we are not regulated by the Solicitors Regulation Authority, the Financial Conduct Authority or any equivalent body. Nothing in this guide constitutes legal, tax or financial advice, and no solicitor–client relationship is created by reading it.
This article is general information only. It reflects the position in England and Wales at the date shown above; the law and the figures change, and Scotland and Northern Ireland differ in important respects. It may not apply to your circumstances. Whether a particular estate needs a grant is ultimately decided by the organisations holding the assets, and their limits change. Administering an estate carries personal legal responsibility, and you should obtain advice from a qualified solicitor, accountant or other regulated professional where appropriate. Always check current rates, fees and deadlines against GOV.UK before acting.