Understanding Trust Property Sales: A Guide for Trustees

A Trust sale refers to a property being sold that is held in Trust. There can be many different types of Trusts and so it is important to take advice from a specialist Trust Lawyer before dealing with a Trust’s assets to ensure you understand the process, any potential tax implications and the necessary reporting requirements. You must also ensure that you have the power under the Trust to sell the property.

From 1 September 2022 most Trusts must be registered with HMRC and regulated practitioners will not be able to act for you in the sale of the Trust property if this has not been done. A Trust created after 1 September 2022 must be registered with HMRC within 90 days.

The only people entitled to sell Trust property are the Trustees, which might not be the person living in the property or the person beneficially entitled to it. Your conveyancer will always check the title register at the outset of the matter to establish who has legal authority to sell the property.

Upon completion of a Trust property being sold, the net sale proceeds will be paid to the Trustees and it is for them to then deal with paying these funds out to whoever is beneficially entitled to the Trust.

Examples of common Trust sales:

Life Interest Trust

Mr & Mrs A (a married couple) own their property as tenants in common, held 50% for each of them.  When Mr A dies his Will provides for his half share of the property to pass into a Life Interest Trust.  This is to enable Mrs A to live in the property for the remainder of her lifetime but for his half share of the property to ultimately pass to his children following her death. However, if Mrs A wishes to sell the property during her lifetime she will only be able to act in relation to her own 50% share of the property.  The Trustees for Mr A’s Will would be required to act for his 50% share of the property.

Discretionary Trust

Mr A owns a property outright and on his death he leaves it to a Discretionary Trust.  His Trustees have discretion on how to best deal with the property for the benefit of his chosen beneficiaries (which will be more than one person). The Trustees have to decide what to do with the property and when they come to sell the property they would be acting as Trustees for the benefit of the potential beneficiaries named in the Will.

Following the completion of the sale of the Trust property they would need to administer the funds in accordance with the terms of the Trust. 

How Pinney Talfourd can help

At Pinney Talfourd, our experienced Residential Property team is well-versed in handling Trust property sales and the complexities involved. We provide clear guidance to Trustees, ensuring compliance with legal obligations and a smooth transaction process. Whether you need advice on Trust registration or assistance with the sale, our team is here to support you every step of the way.