Transferring Assets to a Trustee: What Clients Need to Know

When creating a trust as part of your estate or succession planning, signing the trust deed is just the beginning. A vital next step is transferring the intended assets to the trustee. Without this transfer, the trust cannot operate as intended, and the legal ownership of the trust property remains with you.

Why is transferring assets so important?

Under English trust law, for a trust to be valid and effective, the trustee must hold legal title to the trust assets. This principle stems from the requirement that a trust separates legal ownership (held by the trustee) from beneficial entitlement (enjoyed by the beneficiaries).

The importance of transferring assets to the trustee is reflected in section 53(1)(c) of the Law of Property Act 1925, which provides that a disposition of an interest in land must be in writing and signed. Similarly, the Trustee Act 1925 governs how trustees hold and manage trust property, but this is only possible once assets have been transferred to them.

If the trustee does not acquire legal ownership of the assets, the trust is incomplete and any protections or tax advantages you sought to achieve may fail.

How do you transfer assets to the trustee?

The method of transfer depends on the type of asset:

• Land or property – A deed of transfer is required, complying with section 52(1) of the Law of Property Act 1925, and the transfer must be registered at HM Land Registry.
• Shares in private companies – A stock transfer form must be executed and recorded in the company’s register of members under the Companies Act 2006.
• Cash or investments -Funds can be transferred to a trust bank account or investments re-registered in the trustee’s name.
• Chattels (personal items) – These are transferred by physical delivery and often a deed of gift or written assignment.

Practical points for private clients

• Legal formalities – The required formalities must be observed, especially for land or shares, to ensure the transfer is valid and enforceable.
• Tax and duty – Transfers may attract stamp duty land tax (SDLT) or stamp duty on shares; specialist advice can help mitigate unnecessary charges.
• Clear records -Trustees should retain documents evidencing the transfer to protect against future disputes or HMRC challenges.

Final thoughts

If you are setting up a trust, transferring assets to your trustee is essential to give legal effect to your intentions. Without this step, your trust will be incomplete. Taking professional advice ensures the transfer complies with English law and supports your estate planning goals. If you need to transfer property into a trust or need general advice on setting up trusts our specialist trust team can assist.