Trust Registration Service Update

There has been a recent update to the way trusts and estates are registered. This is known as the Trust Registration Service (TRS).

As of the 1 September 2022, new requirements are in place for both trusts and estates in respect of the requirements for registration with the TRS, even if the estate or trust is not producing any income.

Trusts

The vast majority of express trusts, both taxable and non-taxable, which are created now have to be registered on the TRS. Therefore, it is important that when dealing with trusts you must consider whether they have already been registered or whether they need to be.

There are a number of exceptions where trusts do not require registration, including:

• Charitable trusts, that are registered as a charity in the UK or which are not required to register as a charity.
• Trusts for bereaved minors.
• A trust imposed by courts or created by legislation therefore, those set up under the intestacy rules.

Estates

Complex estates are required to be registered on the TRS.

A complex estate is one where:

• The total Income Tax and Capital Gains Tax due for the administration period is more than £10,000
• Value of the estate was more than £2.5 million at the date of death
• Value of the estate’s assets sold by the personal representatives in any one tax year was more than £500,000

Those estates considered non-complex are not required to be registered on the TRS. However, if the will creates a trust (which will depend on the wording of the will), if the estate has not been administered within two years of the date of the deceased’s death, then the estate will need to be registered by the executors with the TRS.

For example, Mr Smith dies in England on 1 June 2022. He leaves his estate to his executors and trustees to hold on trust to pay his debts and funeral expenses, with the remainder distributed between his wife and son. The trustees are not required to register the trust immediately however, if the estate is not full administered by 1 June 2024 the trust would need to be registered on the TRS as the wording of the will confirmed that it was to be held on trust.

This is most likely to affect charities where they are acting as the personal representative and the estate administration is taking over two years. This can happen if the estate is complex, the will only comes to light sometime after the deceased’s death so there is a delay starting the estate administration or there is a dispute over the will (eg a construction claim or will challenge).

Ongoing Obligations

The TRS must be kept up to date.

Firstly, the details that are held about the trust must be kept up to date for example, the names of any trustee or beneficiary.

In addition, in respect of trusts liable to tax, an annual declaration must be submitted that the details of those associated with the trust are accurate and up to date.

Deadlines

The deadline for registrations for non-taxable trusts was the 1 September 2022.

Trusts now need to be registered within 90 days of it either being created or becoming liable for tax or for estates, by the second anniversary of the deceased’s death.

There are penalties for trustees/executors for failing to register the TRS – though it is not clear what those will be yet.

Some lay executors may not be aware of the rules so if your charity is a beneficiary of an estate which could be affected by this, then you may wish to refer them to the government guidance.