Yes, you can put your house in a trust for your children to control its distribution, protect it from creditors, and manage it until they are of age, often avoiding probate and reducing capital gains tax for them, though it involves legal setup, potential costs, and tax considerations. You transfer the property title to the trust, with a trustee (you or someone else) managing it for the children (beneficiaries). Common types for this purpose include Family Trusts or Testamentary Trusts (created in a will after death).
The simplest way to give your house to your children is to leave it to them in your will. As long as the total amount of your estate is under $15 million (per individual, in 2026), your estate will not pay estate taxes.
The cost of establishing a family trust is generally $1,000 to $2,000 depending on the structure used.
Can a Trust Protect My Home? Some people think that putting their home into a trust will stop the local authority from counting it in their assessment. But if the council believes you did this just to avoid care fees, they can still treat you as if you own the home. This is called “deliberate deprivation of assets.”
It can help save on tax by distributing income efficiently
For property investments, trustees can allocate rental income and capital to beneficiaries in the most tax-effective way each financial year — usually by distributing funds to beneficiaries in lower tax brackets, typically spouses or children.
10 Assets You Should Leave Out of Your Living Trust
Once the family trust has been set up, you will need to transfer the property title into the trust. This means that essentially you're transferring the interest in that property to the trustee, and they will become the new legal owner of that asset.
What Are the Disadvantages Of A Trust?
The crackdown has resulted in the ATO undertaking extensive audits of family trusts and historical distributions, and the issue of hefty Family Trust Distributions Tax (FTD Tax) assessments for noncompliance – being a 47% tax (plus Medicare levy) along with General Interest Charges (GIC) on any historical liabilities.
The best thing you can do is continue encouraging them to create an estate plan so all their assets are safely managed. A good estate plan will include a Durable Power of Attorney and a Medical Power of Attorney, so you'll be in a better position to help if they do become a target of fraud.
Loss of Ownership of Assets Held in the Family Trust
You won't have personal ownership of those assets because you're using the family trust as a vehicle to purchase and hold assets. The trustee is the legal owner of those assets.
The 5x5 Power rule is a way to provide some parameters around the access a beneficiary has to the funds in a trust. It means that in each calendar year, they have access to $5,000 or 5% of the trust assets, whichever's greater. This is in addition to the regular income payout benefit of the trust.
Trusts can be broadly categorized into four main types: Living Trusts, Testamentary Trusts, Revocable Trusts, and Irrevocable Trusts.
Transferring property via inheritance using a life assurance policy. A Section 72 life insurance plan is a policy to cover the inheritance tax bills of the beneficiaries of your estate. Therefore, it allows those beneficiaries to inherit assets without then having to find the money to pay a significant tax liability.
If the sale price is less than the market value of the property, the 'market value substitution rule' will apply, meaning the tax office will deem you to have received the market value of the asset at the time of the transfer.
Using Trusts to Protect and Control Assets
Trusts are one of the most effective tools for passing down wealth with structure and intention. They allow you to control how and when your children receive assets while keeping the inheritance out of probate court.
Family Trust Asset Protection
As the investment property is held in the trustee's name, not your own, the property is protected from creditors if one of the beneficiaries goes bankrupt or is the subject of legal action. This means creditors can't use the property to settle any debt owed.
The Biggest Mistake Parents Make When Setting Up a Trust Fund
IHT may have to be paid on the estate if it's worth more than the tax-free threshold of £325,000. This means that the first £325,000 of your estate is tax-free – the 40% tax only applies to any assets over this threshold.
If your estate is large and complex, a trust could be your best bet. But if your estate is smaller and fairly simple, a will is likely the best option.
A family trust typically pays zero tax on income inside the trust. Instead, the income is distributed to the beneficiaries, who are taxed at their personal tax rates. However, a family trust cannot distribute a tax loss to beneficiaries.
A number of well-known banks in the UK have stopped offering traditional banking services to trusts, citing issues such as cost, complexity and compliance as reasons for exiting a long-established part of the market. One of the key issues is a lack of understanding around the nuances of different types of trusts.
Buying in your own name is simple and tax-effective for many, while trusts and companies provide asset protection and flexibility for larger portfolios. If you are unsure which structure suits your situation, speak to an accountant or property investment specialist.
An irrevocable trust offers your assets the most protection from creditors and lawsuits. Assets in an irrevocable trust aren't considered personal property.
If you already have some legal experience, you might see how an asset protection trust is excellent for protecting assets from litigation and creditors. By removing ownership of the valuable assets in question away from you and your immediate family members, you make those assets practically untouchable…