{"id":888,"date":"2021-12-22T06:05:15","date_gmt":"2021-12-22T06:05:15","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=888"},"modified":"2025-07-02T00:42:36","modified_gmt":"2025-07-01T23:42:36","slug":"hold-shares-on-trust","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/business-structures\/hold-shares-on-trust\/","title":{"rendered":"Can I Hold Shares on Trust in England and Wales?"},"content":{"rendered":"\n<p><span style=\"font-weight: 400\">You may be wondering how it is possible that a trust can own and hold shares. For instance, perhaps you have inherited shares in a family business, or you work for a company that pays you partly in shares held by a trustee. Alternatively, you may be interested in creating a trust to own shares on behalf of your family. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">This article will first explain the principles behind trusts. It will then explain the process of creating a trust for shares.\u00a0<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">How Do Trusts Work?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Typically, if you own something, like a car, you have the right to do with it as you wish (as long as it is not illegal). So effectively, you can enjoy the car by driving it, selling it or giving it away to someone else. The law calls this \u201cbeneficial ownership\u201d because you have:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">a \u201cbeneficial interest\u201d in the property (the car), which refers to the fact that you can drive it, wash it, and treat it as you wish; and<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">a \u201clegal interest\u201d in the property, which refers to your right to sell it or transfer it to someone else (\u201cto dispose of\u201d).&nbsp;<\/span><\/li><\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">The concept of a trust operates by splitting the two elements of beneficial ownership. It gives the legal interest to one person and the beneficial interest to another.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">Additionally, the person with the legal right (or \u201clegal title\u201d) to the property is called the trustee.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400\">The person with the beneficial right (commonly called \u201cthe beneficial interest\u201d) is known as a beneficiary.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The person that creates the trust is called the \u201csettlor\u201d.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Shares Owned by a Trust&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">Nowadays, people commonly use trusts for estate and tax planning. This is because they provide a well-recognised means for the settlor to dictate what happens to their property if they wish for someone else to benefit from it. Likewise, a trust ensures protection over trust property from mismanagement.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Indeed, you can use trusts to:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><span style=\"font-weight: 400\">protect family assets;\u00a0<\/span><\/li><li><span style=\"font-weight: 400\">ensure a minor or someone unable to manage their own affairs will have their assets properly managed; and\u00a0<\/span><\/li><li><span style=\"font-weight: 400\">tax-efficiently pass assets along to others in life, or after the owner dies, by minimising inheritance tax.\u00a0<\/span><\/li><\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">Further, the three most common reasons you may hold shares in trust are:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">as part of an employee\u2019s compensation package;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">to transfer to friends or family as part of your estate planning; and<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">to allow a professional to manage your stock portfolio (\u201ca bare trust\u201d).&nbsp;<\/span><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Creating a Trust to Hold Your Shares<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">If you are interested in <a href=\"https:\/\/legalvision.co.uk\/business-structures\/discretionary-trust\/\">creating a trust<\/a>, you should always seek the advice of a solicitor because the law surrounding trusts can be hard to understand.&nbsp;<\/span><span style=\"font-weight: 400\">However, the process itself is fairly straightforward.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Declaring the Trust<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">First, you will need to declare your intention to create a trust over the shares on behalf of the beneficiaries. You usually do this through a \u201ctrust deed.\u201d&nbsp; This is a legal document evidencing your intention to create a trust over shares.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">If you are instructing a portfolio manager, the beneficiary will be you.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">However, you may intend for someone else to have a beneficial interest in the shares. In that case, you will need to create a trust document evidencing your intention to create a trust. A solicitor should prepare this.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Alternatively, suppose you intend for a financial adviser to maintain a portfolio on your behalf. In that case, part of the documentation you will sign will transfer the legal title of the shares to their name.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">As a general rule, once you create a trust, you cannot bring the trust to an end. In effect, you are splitting your beneficial ownership into the two elements and then transferring each portion to other people. Once this occurs, it is difficult to recall or take back ownership. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">However, there are exceptions to note. <\/span><span style=\"font-weight: 400\">For example, a financial professional might manage your shares, or it may be a situation where you can end the trust at any time and reclaim the legal interest in the shares. This is why it is referred to as a \u201cbare trust\u201d.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Setting the Terms of the Trust&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">Depending on your intentions, there are different reasons for wanting a trust to hold your shares.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">For example, you may want to:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">hold the shares on behalf of your beneficiaries for a certain period, such as when they turn a certain age, at which point they receive beneficial ownership;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">hold the shares until the happening of some event, such as an employee working for the company for five years; or<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">permit certain beneficiaries to only receive the dividend payments from the shares for their life, at which point another class of beneficiaries will get the beneficial ownership.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">As the next step, you may want to specify how exactly the trustee should manage the shares. For instance, should the trustee disperse share dividends as they issue them? Or, perhaps, the trustee should hold shares and reinvest them back into the trust funds.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Choosing a Trustee<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">Following this, you need to <a href=\"https:\/\/legalvision.co.uk\/corporations\/trustee-duty-to-invest\/\">choose a trustee<\/a>. If you are creating a trust to hold company shares on behalf of friends or family, you will need to ensure that the trustee is somebody you can trust. For instance, you can choose another close friend or family member.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">Alternatively, professional trustees will manage the trust in exchange for a fee. If a portfolio manager manages your shares, this person will be your trustee.<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">The law recognises the importance of this role. Therefore, it imposes a particular kind of duty on trustees, called \u201ca fiduciary duty\u201d.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">As a general rule, most trusts have more than one trustee.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">Another option is that you hold the property on trust for the person you wish to enjoy the shares. 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Indeed, there are several reasons you may choose to do so. Commonly, shares in companies are held on trust for:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">estate and tax planning;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">the purposes of an employee\u2019s benefits package; and&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">expediency\u2019s sake, such as if a financial advisor manages your share portfolio.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">Importantly, you should instruct a solicitor to create trusts over shares because trust law can be challenging to understand. If you do not execute the process properly, the law may not uphold your intentions.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you need help aligning your company\u2019s interests with those of your estate planning,&nbsp;<\/span><span style=\"font-weight: 400\">our <a href=\"https:\/\/legalvision.co.uk\/business-lawyers-lp\">experienced business lawyers<\/a> can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us on <a href=\"tel:+448081968584\" class=\"AVANSERnumber dynamic-number\">0808 196 8584<\/a> or visit our&nbsp;<\/span><a href=\"https:\/\/legalvision.co.uk\/membership\"><span style=\"font-weight: 400\">membership page<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/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-1640152796944\"><strong class=\"schema-faq-question\"><strong>Why would a trust hold shares?<\/strong><\/strong> <p class=\"schema-faq-answer\">A trust is a vehicle that ensures property can be efficiently distributed to other people. It ensures that the person who distributed the property can be confident his intentions will be followed. Trusts over company shares are no different. If you want your employees to own a stake in your company but want to restrict when they become entitled to exercise their share options, you can use the trust to facilitate this. If you want to pass your shares to your family, you can use a trust to ensure you do so in a tax-efficient way.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1640152816886\"><strong class=\"schema-faq-question\"><strong>How do I create a trust over shares?<\/strong><\/strong> <p class=\"schema-faq-answer\">You should always seek the advice of a solicitor when creating trusts and transferring valuable property to others. Your solicitor will help you declare your intentions to create a trust over shares and ensure that your intentions are carried out.\u00a0<\/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\/888\" \/>            <input value=\"https:\/\/legalvision.co.uk\/business-structures\/hold-shares-on-trust\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"Can I Hold Shares on Trust in England and Wales?\" 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>You may be wondering how it is possible that a trust can own and hold shares. For instance, perhaps you have inherited shares in a family business, or you work for a company that pays you partly in shares held by a trustee. Alternatively, you may be interested in creating a trust to own shares<a href=\"https:\/\/legalvision.co.uk\/business-structures\/hold-shares-on-trust\/\">Continue reading <span class=\"sr-only\">&#8220;Can I Hold Shares on Trust in England and Wales?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13461,"featured_media":586,"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":"882,2168,2012,1010,3828,2376","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[36],"tags":[88,89,90,94,95,96],"class_list":["post-888","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-structures","tag-trust-deed","tag-corporation","tag-company","tag-trust","tag-hold-shares-on-trust","tag-corporate-trustee"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Can I Hold Shares on Trust in England and Wales? | LegalVision UK<\/title>\n<meta name=\"description\" content=\"It is possible to set up a trust to hold shares. 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