The use of trusts in Wills

October 23, 2023

Using a trust in a Will to pass on inheritance will mean that the intended beneficiary does not have full control of the capital or the income from the asset. It would be controlled by the Trustees. A Trustee is duty-bound to follow the terms of the trust and therefore they should be someone you ‘trust’, living up to its name.

When can they be used?

For example, if the Testator (male) or Testatrix (female) making the Will has a vulnerable child and they do not wish for them to have control over the money or simply the child may be a minor and not mature enough to have full reign over the capital. In these situations, a solicitor may advise that putting money into a trust could make sure they are protected. The Trustees can then distribute the money as and when they felt necessary.

They can also be used when a family of significant wealth wants to leave it to their children. The parents often feel it is important that this is not released to their children in a lump sum. Perhaps the parents do not get along with their child’s partner and they want to ensure the funds are used only for their child and grandchild, not the in-law. In this situation the trust can again help to manage and control when and how the funds are released. Although the trust itself is likely to be flexible in nature, the parents can leave guidance and advice for the Trustees to help them in their decision-making.

It is not a surprise that we are seeing a rise in the use of trusts in Wills, certainly we are seeing a rise in instructions from parents supporting children with vulnerabilities and difficulties, or simply wanting to make sure, as far as they can, that their inheritance is valued and made use of properly and sensibly.

Advantages of a trust

The benefits of including a trust in your Will are however limited. By planning ahead with a trust in a Will, you may be able to take advantage of inheritance tax exemptions. A trust can be a good way to reduce the tax to be paid on your death. The trust may have income tax, capital gains tax and inheritance tax liabilities and may have to file tax returns.

Also, if a trust is set up correctly, it can avoid the need to go through probate with additional fees.

Disadvantages of a trust

Setting up a trust can involve a loss of control over assets that are put into trust. They can also be costly to set up. Many people want to leave their house to their children but do not realise the cost of setting up a trust. It can be expensive and could include legal and administrative fees. They, again, may not comprehend the fact they could lose control when putting their house into a trust. The Trustees will manage it on behalf of the beneficiaries giving them total authority. 

If you would like in-depth information regarding including a trust of any kind in your Will, give one of our team from the Wills & Probate Department a call on 01564 779393 or 0121 705 7571. They will offer you expert advice relative to your personal circumstances.

Bethany Jackson
Paralegal – Wills & Probate Department

This article is for general information purposes only. It does not constitute technical, financial, legal advice or any other type of professional advice and is no substitute for specific advice based on your individual circumstances. We do not accept responsibility or liability for any actions taken based on the information in this article. For more information, please click here.