Selling a house in a trust: a guide

Selling a house that’s held in a trust is typically more complicated than a standard property sale. With trustees, beneficiaries and legal responsibilities to consider, it’s important to understand who has the authority to sell and what the process involves.

In this guide, we’ll explain how trust property sales work, whether a house in a trust can be sold before or after the settlor’s death, the potential tax implications, and the steps you’ll need to take to complete the sale.

What is a house in a trust?

A house that’s held in a trust is a property that’s legally owned by trustees who manage it on behalf of one or more beneficiaries. Rather than an individual person or a couple owning the property outright, the trust becomes the legal owner, while the beneficiaries have the right to benefit from the property according to the terms of the trust.

There are several different types of trusts, including discretionary trusts, life interest trusts and bare trusts. The type of trust can affect how the property is managed, taxed and ultimately sold.

Why would you put a house in a trust?

There are a number of reasons why someone might choose to put a property into a trust – common reasons include:

• Protecting assets for future generations
• Providing for children or vulnerable family members
• Reducing the risk of inheritance disputes
• Allowing someone to live in the property for life before it passes to other beneficiaries
• Helping manage inheritance tax planning
• Making sure assets are managed if someone loses mental capacity

While trusts do offer valuable benefits, there are also legal responsibilities and ongoing admin to contend with, so they’re not to be entered into without professional advice.

Can a property in a trust be sold?

Yes, a property held in a trust can be sold – provided the trustees have the legal authority to do so under the trust deed. If the trust requires multiple trustees, they will need to act together during the sale process.

The proceeds from the sale don’t automatically belong to the trustees – they remain part of the trust and must be managed according to its terms.

Can a trustee sell a trust property without all beneficiaries approving?

In many cases, yes. Trustees have a legal duty to act in the best interests of the beneficiaries, but they don’t always need every beneficiary’s consent before selling the property.

Whether a unanimous approval is necessary will depend on the wording of the trust deed and the type of trust involved.

However, trustees must always:

• Act within the powers given to them
• Make decisions in the beneficiaries’ best interests
• Avoid conflicts of interest
• Achieve a reasonable market value for the property

If beneficiaries believe that trustees have acted improperly or breached their duties, they may be able to challenge those decisions through the courts.

Selling a house in a trust before death

Beneficiaries can sell a property held in the trust while the person who owned the house before the trust did (the settlor) is still alive.

The process depends largely on the type of trust and the powers granted to the trustees. Some trusts give trustees broad authority to sell property whenever appropriate, while others place restrictions on when or why a sale can take place.

If the property is occupied by someone with a lifetime right to live there, their rights will also need to be considered before any sale proceeds.

Once the property is sold, the money received usually remains within the trust and is invested or distributed according to the trust’s terms.

Selling a house in a trust after death

After the settlor has died, the trustees will continue to manage the trust in line with the instructions set out in the trust deed. If the trust allows the property to be sold, the trustees can arrange the sale.

Selling after death may also form part of administering the wider estate, particularly if the trust was created through a will. In these cases, it’s important to understand how probate may affect the trust, as this can affect the overall process.

What are the tax implications of selling a house in a trust?

Selling a property that’s held in trust can have tax consequences, although the exact position will depend on the type of trust, who benefits from it and how the property has been used. Some of the main taxes that may apply include:

• Capital Gains Tax (CGT): If the property’s value has increased since it entered the trust, Capital Gains Tax may be payable on any gain above the trust’s annual exemption amount.
• Inheritance Tax (IHT): Some trusts have ongoing inheritance tax charges or may affect the overall inheritance tax position of the estate.
• Income Tax: If the trust earns income before or after the sale, such as rental income or investment returns, income tax rules may also apply.

How to sell a house held in trust

Although every trust is different, the process is normally as follows:

1. Review the trust deed to confirm the trustees have authority to sell.
2. Get legal advice if there is any uncertainty about the trustees’ powers.
3. Arrange an independent valuation of the property.
4. Ensure all trustees agree to proceed where required. 
5. Instruct a solicitor experienced in trust property sales.
6. Market the property or choose an alternative selling method.
7. Complete the sale and distribute or retain the proceeds in accordance with the trust deed.

If the property needs extensive repairs or the trustees want to avoid a lengthy sale, selling directly to a cash house buyer can often simplify the process and reduce delays.

At House Buyer Bureau, we’ve worked with trustees selling a wide range of trustowned properties, particularly people selling inherited family homes. One issue we come across frequently is that sellers don’t realise the amount of additional information that’s needed compared to a standard property sale. Solicitors have to verify the trust structure, review the deed, confirm you have the authority to sell, and establish who gets the proceeds. Often, there’s more than one trustee and trying to contact all of them can cause delays.

There are often related issues with selling a property in trust when it’s been inherited – the property needs to be insured, utilities managed and paid for, and it has to be maintained during the sale.

House Buyer Bureau has lots of experience helping people who have properties to sell in trust. We aren’t just a quick property buyer. Sometimes people sell to us because they want to be certain the sale will go through, without the stress of selling on the open market. We can make sure that as beneficiaries you receive a fair cash price for your property.

Example customer testimonial from Matt who was struggling to sell his late father’s property: https://www.youtube.com/shorts/8Y4pBvy8IDg

Sell your house in a trust fast with House Buyer Bureau

Selling a trust property doesn’t have to be stressful. If you’re looking for a quicker alternative to the traditional property market, House Buyer Bureau can help.

Whether the property has been inherited, forms part of an estate, or is held in an existing trust, our experienced team understands the additional considerations that are involved with a property that’s part of a trust. We can provide a free, no-obligation cash offer, work to your preferred timescale and buy properties in almost any condition.

There are no estate agent fees, no lengthy property chains and no uncertainty over whether a buyer’s mortgage will be approved. If speed, certainty and convenience are your priorities, selling directly to House Buyer Bureau could be the ideal solution.

Get in touch today to find out how much your trust property could be worth and discover how quickly you could complete your sale.

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Chris

Chris

Chris has worked in property all his career, first as a successful estate agent before spotting a gap in the market for buying property directly from people looking for a simple, quick sale.

He has a passion for property and as an experienced valuer, has looked at well over 50,000 properties so far at HBB. He has extensive experience in property buying and regularly comments in the press on property matters, trends and promotes ways to simplify and speed up the selling process.

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