Trust Solicitors

A trust created by a will (a testamentary trust) is a legal arrangement that comes into effect on your death. Instead of assets passing directly to a beneficiary, they are held by trustees for the benefit of one or more beneficiaries. Trusts can protect assets for minor children, vulnerable beneficiaries, or where you want to control how and when assets are distributed.

In a trust, the legal ownership of the property is held by the trustees. The beneficial ownership — the right to benefit from the property — belongs to the beneficiaries. So in a life interest trust, the trustees hold the legal title, the life tenant has the right to live in the property or receive income from it, and the remainder beneficiaries have the right to the capital when the life interest ends.

A discretionary trust gives the trustees discretion over how and when to distribute income and capital among a class of beneficiaries. No beneficiary has a fixed entitlement — the trustees decide who receives what, and when. This flexibility makes discretionary trusts useful for inheritance tax planning, protecting vulnerable beneficiaries, and providing for future circumstances that cannot be predicted at the time the trust is created.

A protective property trust (or life interest trust) can protect a share of the family home from being used to pay care home fees — but only the share of the first person to die. If the surviving spouse needs care, their share of the property may still be assessed. Deliberately transferring assets into a trust to avoid care fees can be treated as deliberate deprivation of assets by the local authority. We advise on the circumstances in which a property trust is effective and appropriate.

A revocable trust can be changed or cancelled by the person who created it (the settlor) during their lifetime. An irrevocable trust cannot be changed once it has been set up. Most trusts created in England and Wales are irrevocable — once assets are transferred into the trust, they no longer belong to the settlor. This distinction is important for inheritance tax planning: assets in an irrevocable trust may be outside your estate for IHT purposes after seven years.

Trusts can be subject to inheritance tax in three ways: an entry charge when assets are transferred into the trust (if the value exceeds the nil-rate band); a ten-year anniversary charge of up to 6% of the trust's value; and an exit charge when assets leave the trust. The tax treatment depends on the type of trust and the value of the assets. We advise on the IHT implications of any trust arrangement before it is set up.

A trust should have at least two trustees, and no more than four for trusts holding land. Having two or more trustees provides a safeguard — decisions must be made jointly, and if one trustee dies or is unable to act, the other can continue. A sole trustee can act, but this is generally not recommended. We advise on the appointment of trustees as part of our trust drafting service.

Yes — a beneficiary can also be a trustee. This is very common in practice. For example, in a life interest trust, the surviving spouse is often both the life tenant (beneficiary) and one of the trustees. There is no legal prohibition on this, provided the trustee acts in the interests of all beneficiaries and not just their own. We advise on the implications of appointing a beneficiary as trustee.