Trusts are a powerful and essential part of estate planning—especially if your goal is to safeguard your estate for the people you care about most.
A trust can be set up either within your Will (taking effect after you pass away) or during your lifetime, depending on when you want that protection to begin.
There are many reasons you might consider a trust, such as:
- Ensuring your loved ones’ inheritance isn’t reduced due to divorce or other legal challenges after you’re gone
- Protecting your assets from third-party claims or unexpected risks during your lifetime
These are both strong reasons to include a trust in your planning. However, it’s important to understand that for a trust to provide this level of protection, timing is crucial—they must be established before any foreseeable issues arise.
With the right advice and forward-thinking planning, a trust can give you greater control, flexibility, and peace of mind—knowing that what you’ve built will truly benefit those you intend it for.
What Is a Trust?
A trust is a smart legal tool that allows someone to benefit from assets without legally owning them. This separation of ownership can be incredibly valuable when it comes to protecting your estate—especially in situations like divorce, bankruptcy, or long-term care, where anything you legally own may be counted in financial assessments.
Think of a trust as a secure box, where your assets are kept safe inside:
- The Settlors
These are the people who create the trust. They decide what goes into the box, who will manage it (the trustees), who it’s for (the beneficiaries), and how it should be used. They hold the keys to the box—and can pass these on..
- The Trustees
The trustees are given the keys and are responsible for looking after what’s inside the box. Their job is to make sure the beneficiaries benefit in the right way, at the right time—often guided by a letter of wishes from the Settlor.
- The Beneficiaries
These are the people the trust is designed to help. They can access and enjoy what’s inside the box, but they don’t legally own it—meaning it’s protected from third parties who don’t have the keys.
Trusts are often associated with the wealthy—and for good reason. They’ve long been used to protect family wealth, mitigate tax, and ensure assets pass down through generations safely and securely.
But trusts aren’t just for the rich. With the right advice, they can be a smart and practical option for any family looking to protect what matters most.
Why Set Up a Trust?
Trusts offer a wide range of benefits, and the reasons for setting one up can vary depending on your personal circumstances. Whether you’re looking to protect your estate, support your loved ones, or maintain greater control over how your assets are used, a trust can be a powerful solution.
Here are just some of the ways a trust can help:
- Shield your Estate from third party claims.
- Ensure the right people have control over your assets.
- Safeguard assets from divorce or remarriage.
- Ensure only your chosen loved ones benefit.
- Provide protections in times of financial difficulty
- Speed up estate administration process.
- Support vulnerable beneficiaries without affecting their benefits.
- Ensuring your wishes are kept private.
- Protecting your wealth for your bloodline for potentially generations to come.
With the right trust in place, you’re not only protecting what you’ve built—you’re making life easier for the people you care about most.
Q&A
How long can trusts last?
A trust can remain in place for up to 125 years, provided the trustees and beneficiaries agree. While it is possible to bring a trust to an end and distribute the assets, it’s important to seek professional advice before doing so. Dissolving the trust means losing the legal protections it provides—something that should be carefully considered before taking any action.
What responsibilities do people have?
A trust involves three key roles:
- The Settlor is the person (or people) who places the asset into the trust.
- The Trustees are responsible for managing those assets in line with the terms of the trust.
- The Beneficiaries are the individuals the trust is intended to support.
It’s the trustees’ duty to ensure that the beneficiaries receive their inheritance in the right way and at the right time, according to the settlor’s wishes.
Does putting assets in trust mitigate inheritance tax (IHT)?
Whether or not a trust helps mitigate Inheritance Tax (IHT) depends on how it’s set up—specifically, whether it’s created with or without benefit.
For example, if you place your main residence into a trust and continue living there, the trust is considered with benefit, meaning it won’t reduce your IHT liability.
On the other hand, if you set up a Gift Trust for your children and retain no personal benefit from it, the value of that gift may fall outside of your estate after seven years—helping reduce your IHT exposure, while still preserving the protection and control that a trust offers.
If you’d like to learn more about how we use trusts to help clients reduce their Inheritance Tax, feel free to get in touch.
What can be put into trust?
You can place assets you own—such as property, savings, or investments—into a trust. However, there are limits on what you can transfer into trust during your lifetime, and doing so may have tax or legal implications.
That’s why it’s essential to seek advice from a specialist in estate planning before taking any action. They can help ensure the trust is set up correctly and in line with your goals.