Earlier this year we warned you about the Trust Registration Service (TRS) and the obligations that were to be placed on many unsuspecting trustees. We now know what the rules are going to require us to do. It is not quite as bad as is might have been, but it is still going to put a huge responsibility onto many trustees and their professional advisers.
Time scales for Trust Registration
For existing trusts there is a requirement to register by 10th March 2022. For new trusts, subject to the exemptions mentioned below, the requirement is to register within 30 days of creation.
There are penalties for non-registration but for the present these are limited to fixed penalties of £100 and nudge letters. If this does not work more stringent penalties may be introduced.
What trusts have to be registered?
Broadly speaking the answer is that all “express private trusts” have to be registered. An express private trust is one that is created by a private individual and does not arise automatically. This means that many trusts such as Charitable trusts, pension trusts, trusts that arise when someone dies without a Will or co-ownership trusts which are the automatic trusts that arises when two people purchase property for their own use e.g. a house purchase by a couple do not have to register, which is a blessing!
Another very useful exemption is that existing trusts holding assets valued at less than £100 do not have to be registered unless and until further assets are added. This will exempt the thousands of Pilot trusts (many of which will never become active) that are sitting in the storage facilities of solicitors all over the country. This exemption allowed the writer to withdraw his impending resignation, it was a huge relief!
Trusts created in a will
In addition, Will Trusts (that is a Trust created in a Will) do not generally have to be registered within 2 years of death and if the trust is wound up in that period it will not need to be registered. A similar exception applies to trusts of life policies that pay up on death BUT (based on the writer’s understanding of the regulations) it does appear that an Investment type life policy that can be surrendered and which is written in trust, will require registration. It is however important to remember that with Will trusts and Life policy trusts registration will always be required if the trust continues more than two years after death.
What about Bare Trusts or a Property Trust?
Other common trusts that will have to be registered include Bare Trusts which are often used by grandparents to put relatively small sums aside for their grandchildren and property trusts created in Wills where the only asset is usually a half share in a matrimonial home that is occupied by the surviving spouse.
Need help setting up a new trust?
For anyone seeking to create a new trust, registration is an essential requirement and Herrington Carmichael are now including in any estimate we give for such trusts the cost of completing registration. Where there are existing trusts we are seeking to register those with which we deal on a regular basis. However anyone with a pre existing trust, particularly a non-active trust must give consideration to registration and we will be happy to advise as to whether or not registration is required. We are currently offering to carry out registrations for a charge of £250 plus VAT and disbursements (£300 including VAT)
If any of the above is of interest, please contact us at HCprivateclient@herrington-carmichael.com or call us +44 (0)1276 686 222.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
