A Standard Asset Trust is a lifetime trust, set up by deed, that usually holds one main asset such as the family home. The settlors normally stay in control as trustees while they have capacity, can sell and buy another property, and the property can usually pass on death without probate. Names and terms vary between providers.
How a SAT works
You transfer a main asset, usually your home, to trustees under a trust deed. You normally act as trustees yourselves with at least one other person, so you keep control while you have mental capacity. The beneficiaries, often your children, are named in the deed or a letter of wishes.
The term Standard Asset Trust is a product name rather than a legal category. Different firms set these trusts up in different ways, so ask exactly how the trust is structured and taxed.
What a SAT can help with
- Avoiding probate on the property: the home is already owned by the trustees, so it can usually pass without a grant of probate.
- Keeping control: settlors usually remain trustees and can sell the property and buy another, with the new home held in trust.
- Preventing sideways disinheritance: a surviving partner cannot redirect the trust property through a new Will or marriage.
- Protecting beneficiaries: trust property is better protected if a beneficiary divorces or becomes bankrupt.
SAT or FAPT?
| Feature | SAT | FAPT |
|---|---|---|
| Usually holds | One main asset, often the home | The home and sometimes other assets |
| Who controls it | Settlors and chosen trustees | Settlors and chosen trustees |
| Avoids probate on trust assets | Usually | Usually |
| Sideways disinheritance protection | Yes | Yes |
| Typical cost | £850 to £2,000 | £850 to £2,000 |
Both are lifetime trusts with similar tax rules. The right choice depends on your assets and family, so compare written advice from more than one firm.
Tax points to check
- Living in the home rent free usually means it stays in your estate for inheritance tax as a gift with reservation of benefit.
- Transfers above the £325,000 nil rate band can face a 20% entry charge, with up to 6% every ten years.
- Some trust structures can lose the £175,000 residence nil rate band.
- The trust usually needs registering with HMRC's Trust Registration Service.
This is general information, not legal or tax advice.
Questions to ask a SAT provider
- Is this a discretionary trust or an interest in possession trust, and why?
- Who are the trustees now and who takes over if we lose capacity or die?
- What happens to the trust when we move house or remortgage?
- What are all the costs, including Land Registry fees and any annual charges?