How to Set Up a Trust Fund for a Child

To set up a trust fund for a child you decide what it should do, choose a trust type, appoint trustees, prepare a written trust deed, transfer assets in, and register the trust with HMRC where required. Many people take advice before signing, because the drafting and tax choices carry long-term effects.

A trust fund is simply money, investments or other assets held by trustees for a child under terms you set, rather than an outright gift the child can spend at once. It lets you pass wealth down while keeping some control over when and how the child receives it. This guide walks through the trust types, the steps, choosing trustees, and how tax and gifting fit in. It sits alongside our Trusts Explained overview and our estate planning guide. Figures are current as at July 2026 and are subject to change.

One point worth clearing up first: the government's own Child Trust Fund scheme, a tax-free savings account, closed to new accounts some years ago, so a "trust fund" set up today for a child usually means a private legal trust of the kind described here, or a savings product such as a Junior ISA (gov.uk, Child Trust Fund, as at July 2026, subject to change). This guide covers private trusts, not that closed scheme.

What is a trust fund for a child?

A trust fund for a child is a legal arrangement where trustees hold money or assets for the child and manage them under a written deed. On gov.uk a trust is described as an arrangement where trustees control assets for the benefit of one or more beneficiaries. The child does not own the fund outright while young; the trustees do the holding, and the terms decide when and how the child benefits (gov.uk, trusts and taxes, as at July 2026, subject to change).

• Control over timing. A trust can delay full access until the child is older, rather than a lump sum at 18.
• Protection of intent. The terms guide how funds are used, for example towards education or a first home.
• Provision for more than one child. Some trusts can balance the needs of several children, including any not yet born.

Which type of trust suits a child?

The two most common choices for a child are a bare trust and a discretionary trust, and they behave very differently. A bare trust is simple and fixes the child as the beneficiary from the outset; a discretionary trust gives trustees flexibility over who benefits and when. The right structure depends on your aims, the child's age, and how much control you want to keep.

Trust types and the age of entitlement above are drawn from gov.uk/trusts-taxes/types-of-trust, as at July 2026 and subject to change. For a fuller explanation of the simplest structure, see our guide to bare trusts.

How to set up a trust fund for a child, step by step

Setting up a trust follows a fairly settled path: decide what you want it to do, choose a trust type, appoint trustees, prepare a trust deed, transfer assets in, and register the trust where required. Because the drafting and tax choices carry long-term effects, many people take advice before signing anything. The main stages are set out below.

1. Decide the purpose. Clarify who benefits, at what age, and for what, such as education or a home deposit.
2. Choose the trust type. A bare trust for simplicity, or a discretionary trust where flexibility matters.
3. Appoint trustees. Usually two to four trusted people who will manage the assets responsibly.
4. Prepare the trust deed. A written document sets out the terms, beneficiaries and trustee powers.
5. Transfer assets in. Money or investments are placed into the trust for the trustees to hold.
6. Register the trust. Many trusts must be registered on HMRC's Trust Registration Service, generally within 90 days of being created or becoming liable for tax (gov.uk, register a trust as a trustee, as at July 2026, subject to change).

Getting the wording right matters, so many people choose to have a solicitor or STEP practitioner draft the deed rather than use a template. On gov.uk the guidance itself suggests using a solicitor to help avoid costly mistakes when setting up a trust (gov.uk, setting up a trust, as at July 2026, subject to change).

Choosing trustees you can rely on

Trustees are the people who legally hold and manage the fund for the child, so the choice matters as much as the structure. Many settlors appoint two to four trustees, often family members or close friends, alongside or instead of a professional. Trustees take on real duties, must act in the beneficiary's interests, and should be people who will still be around and willing years from now.

• Choose people who are organised, trustworthy and likely to outlast the trust's purpose.
• Having more than one trustee provides a check and continuity if one dies or steps down.
• A professional trustee can add expertise for larger or more complex trusts, usually for a fee.

For what the role involves day to day, see our note on trustee duties.

A special rule where a parent sets up the trust

There is one point parents in particular need to know. Where a parent puts money into a bare trust for their own minor child and the trust produces more than a small amount of income in a year, that income can be taxed as the parent's rather than the child's under the parental settlements rule (gov.uk, parental trusts for children, as at July 2026, subject to change). The rule does not apply to gifts from grandparents or other relatives in the same way. Because the thresholds and detail here are technical, this is one area many people confirm with a qualified professional before relying on it.

Trust funds for children in Scotland and Northern Ireland

This guide describes the law of England and Wales, and there are differences elsewhere in the UK. In Scotland a young person generally has legal capacity from 16, so a child under a bare trust can usually claim the fund at 16 rather than 18 (gov.uk, as at July 2026, subject to change), and Scotland has its own trust and succession law. Northern Ireland has a separate but broadly similar system to England and Wales. Inheritance tax and the Trust Registration Service, by contrast, are UK-wide. Where a trust or family touches more than one UK nation, it can be worth taking advice in each.

Frequently asked questions