Trusts
Why Consider a Trust?
Trusts can be an essential part of effective estate planning, whether they are created within your Will or set up separately during your lifetime. They are commonly used to help protect assets, provide clarity for loved ones, and mitigate potential risks such as care home fees, inheritance tax, or changes in family circumstances.
There are many different types of trusts, each designed to meet specific needs. Our consultants are happy to talk you through the options and explain how trusts may be applied to your personal situation, ensuring the right solution for you and your family.
Trusts can help you:
Protect assets for future generations
Provide security for a spouse or partner
Safeguard inheritances from divorce, debt, or remarriage
Support vulnerable or disabled beneficiaries
Reduce or manage potential inheritance tax liabilities
Maintain flexibility as circumstances change
Types of Trusts We Offer
Protective Property Trust
A Protective Property Trust allows you to leave your share of your property to your chosen beneficiaries—often your children—while still protecting your spouse or partner.
This type of trust ensures that:
Your share of the property ultimately passes to your children
Your spouse or partner retains the legal right to live in the property for their lifetime
Your share of the property cannot be diverted away from your chosen beneficiaries
It is a popular option for couples who want to protect their family home while still providing security for the surviving partner.
Flexible Life Interest Trust
A Flexible Life Interest Trust is often included in a Will where you want to ensure your spouse or civil partner is well provided for, but also want to protect your children’s inheritance.
If your entire estate passes outright to your spouse, there is a risk that your children’s inheritance could be lost or significantly reduced if your spouse:
- Remarries or forms a new relationship
- Requires long-term care
- Accumulates debt or faces financial difficulties
A Life Interest Trust allows your spouse to benefit from your estate during their lifetime, while ensuring that the remaining assets ultimately pass to your chosen beneficiaries.
Discretionary Trust
A Discretionary Trust offers maximum flexibility and control, making it suitable for a wide range of family and financial circumstances.
Key benefits include:
- Flexibility in how and when beneficiaries benefit
- Protection of assets from creditors, divorce, or financial instability
- The ability to adapt to changing personal or financial circumstances
- Providing for multiple generations
- Protecting young or vulnerable beneficiaries
- Potential inheritance tax planning opportunities
This type of trust allows trustees to decide how assets are distributed, based on the needs of beneficiaries at the time.
Nil-Rate Band Discretionary Trust
A Nil-Rate Band Discretionary Trust (NRBDT) is a will-based trust designed to protect assets and maximise inheritance tax efficiency for beneficiaries.
- It allows individuals to allocate up to the £325,000 inheritance tax-free allowance (Nil-Rate Band) into a trust upon death.
- The trust offers flexibility and asset protection, helping safeguard wealth from risks such as divorce, debt, or care costs affecting beneficiaries.
- Trustees control how and when assets are distributed, guided (optionally) by a non-binding letter of wishes.
- It can reduce inheritance tax exposure across generations, particularly for unmarried couples, blended families, and high-value estates.
- Assets placed in the trust can grow outside of an individual’s estate, potentially reducing future tax liabilities, with limited tax charges in the first 10 years.
- However, it involves legal responsibilities, potential tax reporting, and may affect eligibility for the Residence Nil-Rate Band if not managed correctly.
Overall, an NRBDT is a flexible estate planning tool that can protect wealth and optimise inheritance tax, but it requires careful setup and ongoing professional management.
Vulnerable Persons Trust
A Vulnerable Persons Trust is designed to protect the financial future of a beneficiary with a disability, without affecting their entitlement to means-tested benefits.
For example:
John has Down syndrome. His parents want to make a will but are unsure how best to provide for him without risking the loss of his benefits or financial support.
A Vulnerable Persons Trust allows parents to:
- Set aside assets specifically for a disabled child
- Ensure funds are used in the child’s best interests
- Protect eligibility for state benefits
- Provide long-term financial security and peace of mind
A lifetime trust can be used as an effective estate planning tool to protect assets, manage inheritance, and reduce tax liabilities.
- A lifetime discretionary trust allows you (the settlor) to transfer assets into a trust managed by trustees for chosen beneficiaries, removing personal ownership while retaining structured control.
- Trustees are legally responsible for managing the trust in line with the trust deed, with flexibility to distribute assets based on beneficiaries’ needs and changing circumstances.
- Trusts help protect wealth, particularly for young or vulnerable beneficiaries, and safeguard assets from risks such as divorce, bankruptcy, or poor financial decisions.
- They can reduce inheritance tax liability if the settlor survives seven years after transferring assets and does not continue to benefit from them.
- There are important tax considerations, including potential upfront inheritance tax (20%), periodic charges (up to 6%), and ongoing income and capital gains tax obligations.
- Lifetime trusts can last up to 125 years, enabling long-term wealth preservation across generations, and differ from will trusts as they take effect during your lifetime rather than after death.
In summary, lifetime discretionary trusts offer a flexible and protective way to manage and pass on wealth, but require careful planning and professional advice due to their legal and tax complexities.
Speak to Our Consultants
Every family and financial situation is unique. Our experienced consultants are happy to discuss the different types of trusts available and help you understand which options may be most suitable for you and your loved ones.
If you would like advice or further information, please get in touch to arrange a consultation.