Family trusts and your home: what you need to know

Thinking of setting up a family trust? Read our guide to understand the potential impact on land registration and the questions you should ask your legal adviser before making decisions.

Family trusts of land can have implications for land registration later down the line Many people are unaware of the implications when they set up a family trust This guide explains the pitfalls and what to ask your legal adviser

We receive many applications and calls to our Customer Support Centre relating to what are often called “family trusts” and the issues they can cause for homeowners.

There are various reasons why people might consider setting up such a trust, but as they are often unaware of the potential pitfalls, we’ve put together this brief guide to some of the land registration issues we often see with family trusts.

Ownership of property

If you bought your house with someone else, your conveyancer probably asked if you wanted to own it as “joint tenants” or “tenants in common”. Put simply, joint tenants own 100% of the legal registered title (the ‘bricks and mortar’) and the beneficial interest (the right to live in it and enjoy any income, etc). Tenants in common own 100% of the legal registered title between them but can divide up the beneficial interest as they wish.

For a more thorough explanation of the difference between owning land as “joint tenants” and “tenants in common”, see Owning land and property with someone else.

What is a trust?

A trust is a legal arrangement where one or more people (called “trustees”) hold a property for the benefit of others (called “beneficiaries”). It separates the legal ownership from the beneficial ownership. This means the trustees have the power to manage the property, while the beneficiaries are entitled to the benefits it provides, such as income or the right to occupy.

Our blog “Legal estates and beneficial interests: what’s the difference? – HM Land Registry” explains the difference between the registered legal title and “beneficial interests” in more detail. As explained in that blog, HMLR only records ownership of the legal estate in the register of title, not ownership of the beneficial interest.

What is a "family trust" ?

In this blog, a “family trust” means a trust set up in writing by one or more private individuals and which includes that person’s interest in their house, flat or other residential property registered at HM Land Registry.

How family trusts work: an example

A couple - let’s call them Arthur and Brenda - own a house together, which is registered at HM Land Registry. They hold their beneficial interests as tenants in common in equal shares, as shown in the diagram below:

They decide to set up family trusts. Here’s what happens:

Example a): Arthur and Brenda each create a trust in respect of their separate shares in the house – let’s call them the “Arthur Trust” and the “Brenda Trust.” As the registered title itself cannot be divided into shares, these trusts only affect Arthur’s and Brenda’s respective beneficial interests in the house. Arthur appoints a company – let’s call it“ TrusteeCo” - to be the trustee of the Arthur Trust along with him, and Brenda appoints TrusteeCo to be the trustee of the Brenda Trust along with her, as shown below:

Example b): Arthur and Brenda then sign a transfer (known as a form TR1) to transfer their registered title into the joint names of themselves and TrusteeCo as a legal owner of their house, and that transfer is registered with HM Land Registry. TrusteeCo is now a proprietor of the registered title, as shown in the diagram below:

Why might that matter? Selling up or gifting the property

The key thing to understand is that Arthur and Brenda are no longer the only legal owners of their house.

This means that if they want to sell or gift their house to someone else, they now need TrusteeCo to agree to the transfer and sign the legal documents alongside them. Arthur and Brenda cannot simply sign the documents themselves; they now need TrusteeCo to sign them as well.

Remortgaging the property

Similarly, if Arthur and Brenda later want to mortgage their house (say, under an equity release scheme) they would again need to involve TrusteeCo.

Many people do not realise this when they set up their family trust.

Can’t I simply change or remove the trustee?

Changing trustees is not always easy. Let’s say Arthur and Brenda now want to replace TrusteeCo with their children, Claire and David.

Arthur signs a deed replacing TrusteeCo with Claire and David as trustees of the Arthur Trust. Brenda signs a separate deed doing the same in relation to the Brenda Trust.

But whilst this may result in TrusteeCo being replaced as trustee of the Arthur Trust and the Brenda Trust, it does not mean that Claire and David can be registered as new proprietors of the registered title.

This is because those deeds only relate to the beneficial shares in the house which are split between the Arthur Trust and the Brenda Trust. They do not affect the registered title, as shown in the diagram below:

To replace TrusteeCo as registered proprietor, they would need to get TrusteeCo to sign documents to transfer legal ownership of the house.

However, if TrusteeCo cannot or will not sign the documents, things are more complicated:

In some cases, Arthur and Brenda may be able to sign a deed replacing TrusteeCo if that deed clearly relates to the trust of the registered title and not just the Arthur Trust or the Brenda Trust. In other cases, Arthur and Brenda may even need to go to court. What if there was only one owner before the "family trust" was set up?

Even if only one person owned the house, many of the same issues may still arise.

If Arthur and Brenda both die, TrusteeCo would be left as only legal owner of the house.

What if the original owners die?

This means:

only TrusteeCo can deal with the house Arthur and Brenda’s executors cannot sell or otherwise deal with the house Key things to remember

Setting up a “family trust” affecting registered land can have implications for land registration later, particularly if you want to sell, mortgage or gift your property and:

The trustee company is unable to help you (for example, it has gone out of business); or The trustee company is unwilling to help you. What next?

HM Land Registry cannot advise on whether you should set up a family trust or what you should do if you have already set up a trust. For legal advice, we recommend you speak to a qualified lawyer.

More information

For more guidance on property ownership, visit our website GOV.UK.

We welcome your comments about this blog in the comments below. Please note that we are unable to discuss individual cases through the comments section and would request that all such queries be directed to our Contact Us web form where you will receive a response as soon as possible.

https://hmlandregistry.blog.gov.uk/2026/07/06/family-trusts-and-your-home-what-you-need-to-know/

seen at 10:42, 6 July in HM Land Registry.