TRSM23021 - Types of trust that need to be registered: contents: excluded express trusts: contents: estates and trusts arising from someone’s death: creation of will trusts
How to determine whether a will trust has been created
A will may create an express trust. If that trust is still in existence at two years from the date of death, it will need to be registered on TRS. A careful examination of the wording of the will is needed to understand what type of trust it creates and when it arises. Some examples are below.
1. A will may expressly state that the executor holds the estate upon trust as part of the administration of the estate, sometimes known as an administration trust. Example wording:
I give my estate to my executors on trust with power at their discretion to sell all or any part of parts of such property when they think fit. My executors shall pay my funeral and testamentary expenses my debts and any legacies given by this will out of such property or its proceeds of sale and hold the balance upon trust for such of Donald, Harold and Michaela as are living at my death and if more than one in equal shares.
Whilst there may be overlap between the duties of an executor and a trustee, there is clearly an express trust which covers the administration period and therefore starts from the date of death. So, if the administration of the estate continues after 2 years from date of death it must be registered on TRS as a will trust rather than as an estate. This trust would continue until all of the assets are paid outright to Donald, Harold and Michaela.
2. A will may leave a specific amount of money or an asset as a legacy to hold on trust, rather than as part of the residuary estate. This trust is also treated as coming into effect on death and therefore, if it continues after 2 years from date of death it must be registered on TRS.
3. Other trusts effected by will may commence later, either during or before the end of the administration period. In such cases the trust is not required to register until assets have been transferred from the estate to the trust, and only from 2 years following the date of death. For example a will may appoint executors without creating a trust but confirm that the residuary estate is held on trust:
I appoint Sophie as my executor to pay my debts, funeral expenses and to hold the balance upon trust for Gisele absolutely.
Here, the trust technically comes into existence when the administration period has ended and Sophie changes role from executor to trustee. It may be difficult to ascertain when this occurs. If the assets have not been transferred to Gisele within 2 years of death then the trust needs to be registered at that point if the administration period has ended or at the date when the administration period ends if later.
These rules may interact as various trusts can be created by one will.
Example
George dies in England on 4 August 2022. His will appoints Harry as his executor and leaves £500,000 on trust for his husband Jerry, during his lifetime, and then for his son Philip. George leaves the residuary estate on trust for Philip and his daughter Rosa. The estate administration takes longer than anticipated and the residuary estate is assented by the executors to themselves as trustees of the residuary fund on 16 December 2025.
1. The trust of the legacy commences from death and, if still in existence two years from the date of death, it will need to be registered on TRS.
2. The trust of the residuary estate begins when assets are appropriated (transferred) to the trustees or when the administration period ends. The trust of the residuary estate would therefore need to be registered after 16 December 2025 – until then the trust is not in existence as the trustees do not have any assets.
3. If the wording of the will had been different, so that the estate was given to the executors upon trust, the trust would need to be registered from 4 August 2024. However, provided the trustees are the same this is not a different trust from the residuary estate trust and only one registration is required.
4. Note this is a separate consideration from whether the estate needs to register for tax purposes as a complex estate – see TRSM27030.
Additions to the estate
A person’s estate includes the aggregate of all the property to which that person is beneficially entitled. See IHTM04031 for further information on the meaning of ‘beneficial entitlement’. If at any date a trust created by will accepts an addition of property from outside the estate, it will need to register.
Will trusts and registration on TRS
Will trusts are generally exempt from registration for a period of two years from the date of the settlor’s death: the rules regarding the registration of Will trusts and estates are explained in more detail here: TRSM23020