Winding up a Trust Price and Services Information
We want to provide you with all the information you need when considering our legal services. Our aim is to be transparent and enable you to make an informed decision when choosing a law firm.
The legal services we provide are personal and tailored to you and your specific circumstances. In addition to the prices and services listed below, we will always provide a written quote – so you’ll know the full cost before you go ahead.
Would you prefer a simple overview of our trust services first? Read our Guide to winding up a trust and arranging a free 15-minute initial consultation ›
If you have any queries, please contact our friendly team for no-obligation help.
01643 802 263 enquiries@rjpadgett.co.uk
Staff delivering the service
Rebecca Padgett (Managing Director) will carry out the work on your matter. Rebecca Padgett is a Solicitor and a Chartered Legal Executive. She is also a member of the Society of Estate and Trust Practitioners. Rebecca also holds the Institute of Legal Finance and Management’s diploma in Legal Professional Accounts Rules and Bookkeeping. She has over 18 years’ experience in private client work. Read Rebecca’s full profile here ›
Contents
Trust Services: Asset Protection & Discretionary Trusts
1) Review of an asset protection trust/discretionary trust
2) Change of trustees
3) Document storage
4) Winding up a discretionary trust/nil rate band discretionary trust/asset protection trust
Example Scenarios and Prices
5) Example Scenario A: Trust review of a trust containing the Settlor’s property where the Settlor lives
6) Example Scenario B: Trust review with the decision to terminate the trust
Trust services: Life Interest Trusts & Disabled Beneficiary Trusts
7) Winding up a life interest trust or Disabled Beneficiary’s Trust
Example Scenarios and Prices
8) Example Scenario C: Winding up a life interest trust when a life tenant dies
9) Example Scenario D: Winding up a trust for a Disabled Beneficiary
1) Review of an asset protection trust/discretionary trust
We will:
- Review the trust deed and any relevant paperwork from when the trust was created
- Consult with you to understand the motivation behind creating the trust and your wishes going forward
- Review the underlying trust assets and valuations
- Organise up to date valuations if required
- Assess and review inheritance tax regime of trust and compliance with it
- Assess inheritance tax and capital gains tax consequences of any assets exiting the trust
- Provide a letter of advice setting out options with example tax calculations
- Meeting or telephone call to discuss options
What is not included:
- Registration of the trust with HMRC is not included in this service.
- Income tax advice is not included in this service, but we can provide recommendations for chartered accountants who provide this advice.
- Opening a trust bank account for the trustees is not included.
Timeframe:
2 – 3 weeks from provision of trust deed and relevant papers.
Price:
A fixed fee of £600 plus VAT of £120, totalling £720.
We are required to verify the trustees’ identity – this is an additional fee of £30 plus VAT of £6, totalling £36 a person.
Disbursements (payments to third parties):
H M Land Registry – Official Copy Entries £7.00 per copy plus VAT of £1.40, totalling £8.40 per copy. This is to check the title to any property held by the trust.
2) Change of trustees
You may have created a trust with a trust corporation as trustees or individuals who can no longer act or who you would prefer to retire. You may wish to appoint new or additional trustees. We can prepare a Deed of Retirement and Appointment of new Trustees.
We will:
- Consider the trust deed and any relevant powers of appointing new trustees
- Check the law
- Draft Deed of Retirement and Appointment
- Circulate the Deed for signature amongst the retiring and new trustees
- Date the deed once signed and provide a certified copy and arrange to provide the original deed in accordance with the trustees’ instructions
What is not included:
- Registering the trust with HMRC’s Trust Registration Service or updating the Trust Register with HMRC. We can organise this for a fixed fee of £300 plus VAT of £60, totalling £360.
- Transferring the trust assets into the trustees’ names.
- Storage of the original trust documents.
Timeframe:
1 -2 weeks to draft the Deed of Retirement and Appointment and to start circulating it to the trustees for signature. It may take a further week or two to circulate depending on how many trustees there are.
Price:
A fixed fee of £450 plus VAT of £90, totalling £540. This is payable from the trust fund.
If we have already reviewed the trust deed, the fee will be £300 plus VAT of £60, totalling £360.
We are required to verify the retiring and new trustees’ identity. This is an additional fee of £30 plus VAT of £6, totalling £36 per person.
Disbursements (payments to third parties):
Trust Corporation’s fees for considering Deed of Retirement and administrative costs will be advised by the Trust Corporation. These fees vary widely from company to company.
3) Document storage
We can store your original trust documents in our fireproof safe in our secure premises.
You will receive a storage receipt confirming the location of your documents.
You can access your documents subject to 2 working days’ notice and provision of photo ID and written authority from all trustees nominating who can collect the documents or confirming where they should be sent.
We will arrange postage by special delivery.
Price:
A one-off fixed fee of £100 plus VAT of £20, totalling £120. This fee is payable from the trust fund.
Disbursements (payments to third parties):
Special delivery postage fee from £8.75 plus VAT of £1.75, totalling £10.50.
4) Winding up a discretionary trust/nil rate band discretionary trust/asset protection trust
Following our review of an asset protection trust, or discretionary trust, with you (service detailed above), we will implement the agreed strategy.
This may include:
- Preparation of Deed of Appointment to terminate the trust or for assets to exit the trust – fixed fee of £595 plus VAT of £119, totalling £714. This would be payable from the trust fund.
- Registering the trust with HMRC if it has not already been registered – fixed fee of £300 plus VAT of £60, totalling £360.
- Preparation of Inheritance Tax Returns – these may be required for the exit event and for each of the trust’s 10 year anniversaries which may have been missed. Fixed fee of £500 plus VAT of £100, totalling £600. This is per Inheritance Tax Return.
- Capital Gains Tax review – this will require a comparison of the value of the assets when they entered the trust and their value when they exit. In addition, we will review whether any reliefs apply, consider hold over relief and organise a trusted chartered accountant to advise and prepare the relevant tax returns and claim forms. Fixed fee of £300 plus VAT of £60, totalling £360.
Trust administration – fixed fee of £900 plus VAT of £180, totalling £1,080. This includes:
- Organising payment of any inheritance tax
- Organising a distribution of the trust assets in accordance with the trustees’ instructions
- Preparation of a set of final trust accounts
- De-registering the trust with HMRC’s Trust Registration Service
- Liaising with HMRC regarding any queries they may have
Additional fees:
- We are required to verify the beneficiaries’ identities – this is an additional fee of £30 plus VAT of £6, totalling £36 a person.
- If we pay the Inheritance Tax or distribute the trust fund from funds on our client account, we will charge a bank transfer fee of £40 plus VAT of £8, totalling £48 for each payment.
All fees are payable from the trust fund.
What is not included:
- Annual trust administration
- Trust accounts for previous years
- Income tax returns – although we can organise through trusted chartered accountants or your own
- Capital Gains Tax return or claim for holdover relief – although we can organise through recommended chartered accountants or your own
Timeframe:
We will complete the Deed of Appointment, Inheritance Tax Returns and the Capital Gains Tax assessment within 2 – 3 weeks of agreement of the strategy.
It may then take HMRC approximately 5 months to confirm that they have no enquiries to raise, although you may wish to make an interim distribution to the beneficiaries in the meantime. We will advise on the merits and risks of this. We may have to liaise with HMRC and answer any queries. If HMRC do not have any enquiries, the trust can be finalised.
Disbursements (payments to third parties):
H M Land Registry – Bankruptcy searches for beneficiaries £6 plus VAT of £1.20, totalling £7.20 per person. This search is carried out to ensure that a beneficiary is not subject to a Bankruptcy Order. If a beneficiary is bankrupt the distribution should be made to the Trustee in Bankruptcy rather than the beneficiary themselves. The trustee would be liable to the Trustee in Bankruptcy.
H M Land Registry – Official Copy Entries £7.00 per copy plus VAT of £1.40, totalling £8.40 per copy. This is to check the title to any property held by the trust.
Inheritance tax may be payable – the rules regarding the taxation of trusts are very complex. Details of how Inheritance Tax works can be seen on the Gov.uk website at https://www.gov.uk/inheritance-tax. When you instruct us, we will calculate the Inheritance Tax for you.
Example Scenarios and Prices
Settlor – the legal name for the person who created the trust.
Fictional scenarios created to provide examples of costs.
5) Example Scenario A
Trust review of a trust containing the Settlor’s property where the Settlor lives.
A trust was created for asset protection reasons. The trustees are the settlor and a trust corporation (who advised and created the trust).
The trustee/settlor wishes to move and realises that the trust corporation need to be involved. (The settlor was not provided with very comprehensive advice when the trust was created.)
The trust paperwork is reviewed and a letter of advice setting out a strategy is sent to the settlor/trustee.
The settlor/trustee decides to request that the trust corporation retires as trustee and have their children are appointed instead.
The settlor’s property needs to be transferred into the new trustees’ names.
Legal fees (all fixed-fee basis)
Review of trust: £600 plus VAT of £4120, totalling £720
Deed of Retirement and Appointment of new Trustees: £300 plus VAT of £60, totalling £360
Identification fee: 4 individuals (2 trustees, 2 new trustees) at £30 plus VAT of £6 each, totalling £144
Total payable to R J Padgett Limited: £1,020 plus VAT of £204, totalling £1,224
Disbursements and third-party costs
Land Registry – Official Copy Entries: £7 plus VAT of £1.40, totalling £8.40
Land Registry – Fee to alter the register: £20 no VAT, totalling £20
Conveyancing fee for transfer of property into trust – estimated £750 plus VAT of £150, totalling £900
Trust Corporation fee for retirement – subject to their terms and conditions
Total disbursements and third-party costs: £777 plus VAT of £151.40, totalling £928.40
Please note that whilst these fees would be payable from the trust fund, in this example the only asset is the settlor’s home so the settlor will need to pay the fees themselves.
6) Example Scenario B
Trust review, client decides to terminate the trust.
Following the death of the settlor’s spouse, the funeral plan company advised them to put their home into trust. The settlor followed the advice without a full understanding of the implications. They were still grieving the loss of their spouse, so it was not the best time for such an important decision.
They were appointed as a trustee with two solicitors from the trust company. The house was put in trust and the settlor had a right to live in it.
The trust company went bust and the settlor was contacted by a successor firm asking if they had registered the trust with HMRC.
The settlor requires a review of the trust along with the Capital Gains Tax and Inheritance Tax implications of terminating it and transferring the property to their adult child. Following this, the settlor decides to continue with terminating the trust and transferring the property to their adult child.
The trust company trustees cannot be traced so the settlor appoints two new trustees to replace them. A Deed of Appointment is executed to terminate the trust. The trust is registered and de-registered with HMRC. The property is transferred to the beneficiary.
There is Inheritance Tax payable as the property is worth over £325,000. The trust had been active for 12 years, so two Inheritance Tax Returns are required. (The settlor was not aware that they needed to complete an Inheritance Tax Return on the 10th anniversary of the creation of the trust.) These are sent to HMRC and the Inheritance Tax is paid.
It is possible to claim main residence relief for Capital Gains Tax purposes and a chartered accountant is instructed to prepare this for the trustees.
HMRC confirm that they have no enquiries to make. The trust is concluded.
Legal fees (all fixed-fee basis)
Review of trust: £600 plus VAT of £120, totalling £720
Deed of Retirement and Appointment of new trustees: £300 plus VAT of £60, totalling £360
Deed of Appointment to terminate the trust: £595 plus VAT of £119, totalling £714
2x Inheritance Tax returns: £500 plus VAT of £100 each, totalling £1,200
Electronic transfer fee to pay Inheritance Tax: £40 plus VAT of £8, totalling £48
Capital Gains Tax assessment: £300 plus VAT of £60, totalling £360
Trust administration fee: £900 plus VAT of £180, totalling £1,080
Identification fee: 3 individuals (1 trustee, 2 new trustees) at £30 plus VAT of £6 each, totalling £108
Total payable to R J Padgett Limited: £3,230 plus VAT of £646, totalling £3,876
Disbursements and third-party costs
Chartered accountant fee for Capital Gains Tax return – Estimated, £450 plus VAT of £90, totalling £540
Land Registry – Official Copy Entries: £7 plus VAT of £1.40, totalling £8.40
Land Registry – Bankruptcy search £6 plus VAT of £1.20, totalling £7.20
Land Registry – Fee to alter the register: £20 no VAT, totalling £20
Conveyancing fee for transfer of property out of trust – Estimated, £750 plus VAT of £150, totalling £900
Inheritance Tax payable to HMRC – Estimated, £2,000
Total disbursements and third-party costs: £3,233 plus VAT of £242.60, totalling £3,475.60
Please note that whilst these fees would be payable from the trust fund, in this example the only asset is the settlor’s home so the settlor will need to pay the fees themselves.
7) Winding up a life interest trust or disabled beneficiary’s trust
Following the death of a life tenant (the person who had the right to use the trust assets) or a disabled beneficiary, the trust can be wound up and distributed to the ultimate beneficiaries. Inheritance Tax needs to be considered.
We will:
- Consider and analyse the trust deed
- Register the trust with HMRC if not already registered
- Organise valuations of the trust assets
- Prepare a valuation of the trust based on its assets at the date of the deceased trust beneficiary’s death
- Liaise with the executors of the deceased trust beneficiary’s estate
- Calculate the Inheritance Tax
- Complete Inheritance Tax Return for the trust if required (unlikely as it can be reported by the deceased trust beneficiary’s executors on the Inheritance Tax Account they submit)
- Organise payment of Inheritance Tax
- Encash the trust’s assets
- Claim loss relief from HMRC if relevant
- Distribute the trust fund
- Prepare trust accounts
- De-register the trust with HMRC on finalisation
What is not included:
- Income Tax return and Capital Gains Tax return
- Conveyancing fees for sale of property – we do not offer a conveyancing service however we can recommend and organise quotes from trusted conveyancers
Timeframe:
4 – 6 weeks to value the trust fund and calculate the Inheritance Tax.
The trust assets are in the Trustees’ names so can be encashed immediately. This process can take between 2 weeks to 2 months depending on the complexity of the assets and the asset holders’ requirements. If the trust has a property, it will be dependent on the time it takes to sell the property.
It is advisable to wait for HMRC’s enquiry window of 12 weeks from the date of the Inheritance Tax Account to close before making final distributions from the trust.
Price:
A fixed fee of £3,000 plus VAT of £600, totalling £3,600. This is payable from the trust fund.
In addition, we will need to verify the identities of the trustees and the beneficiaries. This costs £30 plus VAT of £6, totalling £36 per person.
When we transfer funds to pay Inheritance Tax or make a distribution to a beneficiary we charge an electronic bank transfer fee of £40 plus VAT of £8, totalling £48 per transaction.
This pricing is based on a trust with a property, some investments and a couple of bank accounts with a value of £700,000 and three beneficiaries.
The price will be more expensive if the trust has more assets, complex assets, missing beneficiaries and/or more beneficiaries.
Disbursements (payments to third parties):
Inheritance Tax may be payable. Details of how Inheritance Tax works can be seen on the Gov.uk website at https://www.gov.uk/inheritance-tax If you instruct us, we will calculate this for you.
H M Land Registry – Bankruptcy searches for beneficiaries £6 plus VAT of £1.20, totalling £7.20 per person. This search is carried out to ensure that a beneficiary is not subject to a Bankruptcy Order and that the distribution should be made to the Trustee in Bankruptcy rather than the beneficiary. The trustee would be liable to the Trustee in Bankruptcy.
H M Land Registry – Official Copy Entries £7.00 per copy with VAT of £1.40, totalling £8.40 per copy. This is to check the title to any property held by the trust.
Example Scenarios and Prices
Fictional scenarios created to provide examples of costs.
8) Example Scenario C
Winding up a life interest trust when a life tenant dies.
A lady dies. She had a life interest in a trust created by her late husband. The trust contained a property, some investments, and a couple of bank accounts. The trust was valued at £700,000 when she died.
Her estate is being administered by her children. The trustees of the trust fund are her late husband’s children. Her own estate is worth £400,000. Inheritance Tax is therefore payable from her estate and the trust fund.
The trust is to be divided between three beneficiaries.
The trust is valued as at her date of death – this requires organising valuations of the trust assets. It is necessary to liaise with her executors and collaborate to ascertain the combined value of the trust fund and her estate. It is necessary to organise payment of the Inheritance Tax.
The assets can be encashed and the property sold. The property sells at a reduced value compared to the value at her death so it is possible to submit a claim for loss relief to HMRC to claim a refund of Inheritance Tax.
A set of trust accounts are prepared showing all financial transactions and how each beneficiary’s inheritance is made up. The trust fund is distributed.
Legal fees (all fixed-fee basis)
Trust administration: £3,000 plus VAT of £600, totalling £3,600
Identification fee: 3 individuals (trustees/beneficiaries) at £30 plus VAT of £6 each, totalling £108
Electronic transfer fee to pay Inheritance Tax: £40 plus VAT of £8, totalling £48
Electronic transfer fee to make distributions to beneficiaries (6 transfers): £40 plus VAT of £8 each, totalling £288
Total payable to R J Padgett Limited: £3,370 plus VAT of £674, totalling £4,044
Disbursements and third-party costs
Land Registry – Official Copy Entries: £7 plus VAT of £1.40, totalling £8.40
Land Registry – Bankruptcy searches (6): £6 plus VAT of £1.20 each, totalling £43.20
Total disbursements and third-party costs: £43 plus VAT of £8.60, totalling £51.60
These fees are payable from the trust fund.
9) Example Scenario D
Winding up a trust for a disabled beneficiary.
A trust was created for a disabled beneficiary who has died. The trust was created by the beneficiary’s deceased parent’s Will. On the beneficiary’s death, the trust comes to an end and is to be distributed to the beneficiary’s cousin. The cousin’s whereabouts are unknown and the Will was prepared in the 1990s.
The value of the trust fund is £350,000 and consists of an investment portfolio. The deceased beneficiary’s estate is modest as they lived in a residential home and received means tested benefits.
The value of the trust fund is above the Nil Rate Band of £325,000 and Inheritance Tax is payable. The trustees encash the investments and organise payment of the Inheritance Tax.
The beneficiary has died without a valid Will so their estate passes under the intestacy rules. Their estate is to be separately administered.
The trustees instruct a firm of genealogists to trace the missing cousin. They eventually locate the cousin and the trustees can administer the trust. The investments were sold within a year of the deceased beneficiary’s death at an overall loss so the trustees can claim loss relief and a refund of Inheritance Tax.
A set of trust accounts are prepared and the trust fund is distributed to the cousin.
Legal fees (all fixed-fee basis)
Trust administration: £4,000 plus VAT of £800, totalling £4,800
Tracing missing beneficiary: £300 plus VAT of £60, totalling £360
Identification fee: 3 individuals (2 trustees & 1 beneficiary) at £30 plus VAT of £6 each, totalling £108
Electronic transfer fee to pay Inheritance Tax: £40 plus VAT of £8, totalling £48
Electronic transfer fee to make distributions to beneficiary (2 transfers): £40 plus VAT of £8 each, totalling £96
Total payable to R J Padgett Limited: £4,510 plus VAT of £902, totalling £5,412
Disbursements and third-party costs
Land Registry – Bankruptcy searches (2): £6 plus VAT of £1.20 each, totalling £14.40
Genealogist fee – Estimated, £500 plus VAT of £100, totalling £600
Inheritance Tax payable to HMRC – Estimated, £2000
Total disbursements and third-party costs: £2,512 plus VAT of £102.40, totalling £2,614.40
These fees are payable from the trust fund.
Prefer a simple overview? Winding up a Trust ›