{"id":174949,"date":"2022-08-23T03:31:58","date_gmt":"2022-08-23T02:31:58","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=174949"},"modified":"2026-03-26T23:43:19","modified_gmt":"2026-03-26T23:43:19","slug":"run-business-trust","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/business-structures\/run-business-trust\/","title":{"rendered":"How Do I Run a Business Through a Trust in England?"},"content":{"rendered":"\n<p>A trust describes a special relationship between individuals where trustees manage property on behalf of beneficiaries, but it is not a business structure in the way that a company or sole trader is. Understanding this distinction is essential before deciding how to structure your business. This article will outline the law surrounding trusts and consider the limitations of trusts as a business structure.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">The Law of Trusts<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Trusts are not separate legal entities like an <\/span><a href=\"https:\/\/legalvision.co.uk\/corporations\/incorporate-a-company-england-wales\/\"><span style=\"font-weight: 400\">incorporated company<\/span><\/a><span style=\"font-weight: 400\">. They cannot enter contracts, sue others or own property. Instead, a trust describes a special relationship the law recognises between the trustees and the beneficiaries. The law of trusts governs how the trustees must treat trust property and <\/span>the relevant <span style=\"font-weight: 400\">rights the beneficiaries have.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">There are three key individuals in a trust.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Settlor<\/td><td>The settlor is the person that owns some form of property \u2014 shares, equipment, land, security interests, etc. \u2014 before a trust comes into existence, and then takes the property and creates a trust over it.&nbsp;<\/td><\/tr><tr><td>Trustees<\/td><td>The trustee is the person with the legal right in the property. When the settlor creates a trust, the legal title to the property transfers to the trustee. Since they own the legal title in the property, they can manage the property, such as by buying and selling trust property.&nbsp;<br><br>As is common in business cases, the settlor may be the same person as the trustee and will often also be a beneficiary.&nbsp;<\/td><\/tr><tr><td>Beneficiaries<\/td><td>Beneficiaries are those that stand to enjoy the property in some capacity. This interest is called an equitable interest. For shares, this might mean beneficiaries enjoy dividends or a right in the future to own the shares outright. For property, it might mean receiving rental payments or outright owning the property in the future.&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Duties of a Trustee<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">A settlor can intentionally create a trust, or they can arise automatically by operation of the law. Where a trust exists, regardless of the context, the trustee owes the beneficiary a <a href=\"https:\/\/legalvision.co.uk\/business-structures\/duties-of-a-commercial-trustee\/\">fiduciary duty<\/a><\/span>. This is the <span style=\"font-weight: 400\">highest standard the law imposes on an individual. In practical terms, a trustee must:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">always act with the best interests of the beneficiaries and the trust as a whole in mind;&nbsp;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">never use trust property for personal gain;&nbsp;<\/span>and<\/li>\n\n\n\n<li><span style=\"font-weight: 400\">always account to the trust for any gain that arises incidentally from the trustee\u2019s position.&nbsp;&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">In a commercial context, trustees often exist as beneficiaries. A common example is in a<\/span> <span style=\"font-weight: 400\">partnership<\/span>, <span style=\"font-weight: 400\">where one or more partners holds property on trust for the o<\/span>ther <span style=\"font-weight: 400\">partners and the partnership as a whole. The practical effect of this is that the interests of all parties are more closely aligned. However, a beneficiary that is also a trustee cannot act independently and privately with the trust property.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Companies and Sole Traders&nbsp;<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">As mentioned, a trust is not recognised as a legal entity in England. It is not a business structure like a <\/span><a href=\"https:\/\/legalvision.co.uk\/business-structures\/sole-trader-partnership-company\/\"><span style=\"font-weight: 400\">sole trader, partnership, or company<\/span><\/a><span style=\"font-weight: 400\">. Therefore, unlike a company, you cannot bring a trust into existence through incorporation.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\"><font color=\"#000000\"><span>Likewise, a trust will not exist as a sole trader business<\/span><\/font><\/span>. This is <span style=\"font-weight: 400\"><font color=\"#000000\"><span>because it requires two or more people with ownership interests in business property.<\/span><\/font> Since sole traders are, by definition, the only owner of a business, a trust will not exist.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Trust Corporations&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">Despite the name, trust corporations are not businesses run as trusts. Instead, they are incorporated entities, such as a company, that manage trusts on behalf of the beneficiaries. You can think of trust corporations as for-profit trustees and not trusts themselves.&nbsp;<\/span><\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+448081968584\" class=\"not-prose\">0808 196 8584<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex justify-center text-left gform_input_bg_white    \">\n    <script>\nvar 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This means that all business assets are legally owned by at least one of the partners in their personal capacity.&nbsp;<\/span><\/p>\n\n\n\n<p>I<span style=\"font-weight: 400\">deally, each partner would have their name on the title to partnership property.<\/span> However<span style=\"font-weight: 400\">, p<\/span>roperty <span style=\"font-weight: 400\">law does not always permit multiple people to have their name<\/span>s<span style=\"font-weight: 400\"> on a piece of property. The most common example is land law \u2013 no more than four individuals can have their name on the title to the land. Therefore, in the context of a partnership, where a piece of land is used as partnership property, partners with their names on the legal title owe trustee duties toward all the other partners without their name on the title. In other words, the law says these partners \u2014 the trustees \u2014 hold the property on trust for the other partners.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">The partners without their names on the title to the land still have an <\/span><i><span style=\"font-weight: 400\">equitable <\/span><\/i><span style=\"font-weight: 400\">interest in the land and are thus beneficiaries.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">Ultimately, <\/span><a href=\"https:\/\/legalvision.co.uk\/business-structures\/general-vs-limited-partnership\/\"><span style=\"font-weight: 400\">general partnerships<\/span><\/a><span style=\"font-weight: 400\"> are governed by the law of equity and trusts, but partnership structures themselves are not trusts.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Trusts Over Family Shares<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">In the context of a trust regarding a family business, generally, this is not a trust over the business itself but rather a trust over the shares in the business.<\/span> That is, the business is not run through a trust, but instead, the ownership rights in the business are <a href=\"https:\/\/legalvision.co.uk\/business-structures\/hold-shares-on-trust\/\">held on<span style=\"font-weight: 400\"> trust<\/span><\/a><span style=\"font-weight: 400\">.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">This commonly arises when there is an incorporated business owned by a single person. The owner, who owns all the shares in the company, may want some of their family to benefit from the success of the business without giving them any input into how the business is run. Accordingly, the owner (settlor) can create a trust over some or all of the shares, entitling the family member beneficiaries to the dividends (declared profits) from the company.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">The settlor\/owner may create a trust over some or all of the shares in their lifetime, or the owner may leave a will that creates a trust over the shares upon their death.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">Additionally, the trustees will have legal rights in the shares, meaning they can sell them if they believe it will benefit the trust and its beneficiaries. Likewise, trustees will typically exercise voting rights in the shares on behalf of the beneficiaries.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Where the settlor\/owner is the sole director (as may be common for smaller businesses), the business will need to consider succession planning for when they die. Specifically, the trustees will likely become directors in the company, which entails substantial additional duties.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Finally, while you often see trusts over company shares in the context of family businesses, trusts can and do own shares in very large companies. In fact, many of the largest shareholders in public companies are investment funds that hold shares in the company on trust for its investors.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Investment Vehicles&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">An exception to the rule that you cannot run a business through a trust may be for certain investment activities run through unit trusts. Unit trusts are special vehicles in which investors can buy shares and receive a portion of the return on the investment fund.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">However, the way that these vehicles are structured is quite complex. Additionally, investment activity is highly regulated. It is advisable to engage a lawyer if you are considering creating a trust as an investment vehicle.&nbsp;<\/span><\/p>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/4\/2023\/05\/19032432\/Screen-Shot-2023-05-19-at-12.24.24-pm.png\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">Company Registers<\/div>\n            <div class=\"body-text\">\n                <p>When you incorporate a company in England and Wales, you must maintain a number of company registers at its registered office or at the Companies House. This template includes these company registers.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/legalvision.co.uk\/documents\/company-registers\/\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p><strong>Key Statistics<\/strong><\/p>\n<ol>\n<li><strong>2.7 million businesses:<\/strong> As of March 2023, the UK had 2.727 million VAT and\/or PAYE-registered businesses, marking a 1.5% decrease from the previous year.<\/li>\n<li><strong>\u00a335.5 billion:<\/strong> Challenger and specialist banks provided a record \u00a335.5 billion in lending to smaller businesses in 2022, surpassing lending by major UK banks.<\/li>\n<li><strong>\u00a322.1 billion:<\/strong> The smaller business asset finance market reached a new high of \u00a322.1 billion in 2022, marking an 11% increase in transactions.<\/li>\n<\/ol>\n<p><strong>Sources:<\/strong><\/p>\n<!-- wp:paragraph {\"fontSize\":\"small\"} -->\n<ol>\n<li>Office for National Statistics, &#8220;UK Business; Activity, Size and Location: 2023,&#8221; 27 September 2023.<\/li>\n<li>British Business Bank, &#8220;Small Business Finance Markets Report 2023,&#8221; 2023.<\/li>\n<\/ol>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Key Takeaways&nbsp;<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Trusts are not business structures. You cannot necessarily run a business through a trust, though trusts may arise between business owners. For example, in a general partnership, partners with the legal right to partnership property will hold it on trust for the other partners and the partnership. Trusts over family shares are also quite common<\/span>. These allow family members to benefit from the property without directly controlling the company.<span style=\"font-weight: 400\"> However, this is not the same as running a business through the trust.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you need help with your business, <\/span>LegalVision provides ongoing legal support for all businesses through our fixed-fee legal membership. Our experienced <a href=\"https:\/\/legalvision.co.uk\/business-lawyers-lp\"><span style=\"font-weight: 400\">business lawyers<\/span><\/a> help businesses across industries manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee.\u00a0To learn more about LegalVision\u2019s legal membership, call <a href=\"tel:+448081968584\" class=\"AVANSERnumber dynamic-number\">0808 196 8584<\/a> or\u00a0<a href=\"https:\/\/legalvision.co.uk\/membership\/\" target=\"_blank\" rel=\"noreferrer noopener\">visit our membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Frequently Asked Questions<\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1661221184435\"><strong class=\"schema-faq-question\"><strong>Can I run my business through a trust?<\/strong><\/strong> <p class=\"schema-faq-answer\">Trusts are not business structures like a company or partnership. As such, you cannot operate a business through a trust structure.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1661221196806\"><strong class=\"schema-faq-question\"><strong>What is the relationship between trusts and the management of a business?<\/strong><\/strong> <p class=\"schema-faq-answer\">Trusts govern special kinds of ownership over property. In partnerships, the business owners (partners) owe each other fiduciary duties and may own business property on trust for the other partners. Separately, you can create a trust over company shares so that beneficiaries receive dividends but do not participate in the decision-making of the business.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1719361626317\"><strong class=\"schema-faq-question\">How do trusts work for family businesses? <\/strong> <p class=\"schema-faq-answer\">For family businesses, it can be the case that the business owner (the settlor) wants other family members to profit from the business. At the same time, they may wish to avoid having family members provide input into running the business itself. In this case, trusts usually exist over the shares in the business. This allows family members to gain a share of the dividends\/declared profits. These trustees may then succeed the business owner as company directors when they pass away. <br \/><br \/><\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1774568295759\"><strong class=\"schema-faq-question\">What fiduciary duties does a trustee owe beneficiaries?<\/strong> <p class=\"schema-faq-answer\">Trustees must always act in beneficiaries&#8217; best interests, never use trust property for personal gain, and account to the trust for any incidental gains arising from their position as trustee.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"9eb4f72322\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/174949\" \/>            <input value=\"https:\/\/legalvision.co.uk\/business-structures\/run-business-trust\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"How Do I Run a Business Through a Trust in England?\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>A trust describes a special relationship between individuals where trustees manage property on behalf of beneficiaries, but it is not a business structure in the way that a company or sole trader is. Understanding this distinction is essential before deciding how to structure your business. This article will outline the law surrounding trusts and consider<a href=\"https:\/\/legalvision.co.uk\/business-structures\/run-business-trust\/\">Continue reading <span class=\"sr-only\">&#8220;How Do I Run a Business Through a Trust in England?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13461,"featured_media":3094,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"4267,1438,1766,172122,2726,1802","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[36],"tags":[20,21,88,94,979],"class_list":["post-174949","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-structures","tag-small-business","tag-medium-business","tag-trust-deed","tag-trust","tag-investment-vehicle"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How Do I Run a Business Through a Trust? | LegalVision UK<\/title>\n<meta name=\"description\" content=\"Trusts are not business structures though there are limited circumstances where a trust may arise between business owners. 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