A Trust is set up to safeguard assets for your loved ones and is managed by people you will appoint known as Trustees. The simplest way to understand a Trust, is to think of it as a box in which you the settlor will place a chosen asset. The asset will only be released to a person of your choice, known as the beneficiary, in accordance with your specific instructions, e.g. upon a desired date or an event occurring, such as someone turning 18.

There are a number of benefits to setting up trusts for your loved ones, these include:

  • Reducing or avoiding inheritance tax.
  • Making sure your loved ones are cared for properly after your death.
  • Protecting the trust asset from vulnerable or spendthrift beneficiaries.

Trusts can be complicated and it is important too fully understand the implication of what happens to an asset once it is placed in Trust.

There are many types of trusts, the following are two examples of when they may be used and the benefits that may be gained:


It has increasingly become an all too familiar story, whereby a surviving spouse has been forced to sell his/her home by a local authority in order to finance the cost of long term care. This situation could however be limited with the creation of a Property Trust Will, which can only be done whilst both parties are still living. It is therefore essential for both parties to make or amend their existing Wills to include a clause which makes provision for each parties share of the home to be left to their children or other beneficiaries. Therefore, should there be an eventuality where, following the death of the first spouse, the surviving spouse enters into care, the Property Trust will protect the value of half of the property that belonged to the deceased spouse. This means that only one half of the value of the property can be used in the local authorities financial calculations.


If a member of your family has severe mental or physical disabilities or if there are any orphaned minors, a Vulnerable Beneficiaries Trust has special tax treatments provided certain conditions are satisfied. The special tax treatment broadly aims to tax the income and gains of the trust in the same way as if the individual beneficiary’s own allowances, reliefs and rates applied, and to ensure that annual and aniversary tax charges do not apply.