The £1000 upfront cost for setting up a trust sounds about right (around 1,300 in the US). I would opt for that as what you place in the trust you hope to gain in value, and you will probably continue to contribute to it, and it will be much simpler than the 7.5%.
In the US you can put stipulations in a trust saying that this money can only be used for a down payment on a home, for school, buying purple glitter, taking care of a pet, pretty much anything you could think of as long as it is legal.
Not sure about the UK but in the US once you set up a trust there are no reoccurring fees to keep it active or anything. Once a trust is made it is its own legal entity basically.
I also have no idea how estate taxes or probate works in the UK but in the US, anything that is not in a trust when someone dies has to go to probate court. And probate court can take years (usually at least 1), and any assets that go through probate court are taxed again. Whereas any assets assessed up to 5 million in a trust, can be passed tax free, and any remainder above the 5 million taxed.
So even if you only plan on putting 17k in, if it were to not be in a trust and taxed, she would probably end up with 10-12k... So at least in the US, it is almost always worth the upfront cost of the trust.
Any large assets like a home, business, cars, stocks, savings accounts should really be kept in your trust and under your trusts name, not your own actual name. Ideally everything except for a checking account for your usual spending (groceries, mortgage, utilities, spending money, etc) should be in a trust in the event that you pass away.
Its not something a lot of people like to think about or address. Many people think that they'll have time before they pass away to set things up. (fall ill, seek treatment, have time to line things up, etc)... But the world is unpredictable and many people are lost suddenly without warning. Which isn't very comforting.
Also many people think that trusts are just for the 1% ultra-rich, without really knowing how they work, or how much their assets will be taxed when they leave their estate to their children.