How a Trust Works
A trust involves three parties:
- Settlor — the person who creates the trust and transfers assets into it
- Trustees — hold and manage the assets according to the trust deed
- Beneficiaries — the people who benefit from the assets
Once assets are placed into a trust, they are no longer owned by the settlor. They are owned by the trustees — on behalf of the beneficiaries.
Common Types of Trust
| Type | How it works | Best for |
|---|---|---|
| Discretionary Trust | Trustees decide who benefits and when — full flexibility | Protecting assets for multiple beneficiaries |
| Bare Trust | Beneficiary has absolute right to assets at 18 | Straightforward gifts to children/grandchildren |
| Life Interest Trust | Beneficiary gets income/use during lifetime; capital passes on death | Second marriages, blended families |
| Protective Property Trust | Your property share held in trust after your death | Protecting home from care home fees |
| Disabled Person’s Trust | Special tax treatment for beneficiaries with disabilities | Providing for disabled dependants |
When Is a Trust Useful?
- Blended families — a Life Interest Trust ensures your spouse can live in the home but your children ultimately inherit
- Care home protection — a Protective Property Trust shields your share from means-testing
- Young beneficiaries — assets held until children are mature enough to manage them
- IHT planning — assets transferred into trust 7 years before death fall outside the estate
- Vulnerable beneficiaries — protect assets from being misused by someone with addiction, debt, or vulnerability issues
💡 A trust written into your Will (a “testamentary trust”) is the most common approach — it comes into existence only on your death, so there are no running costs or complications during your lifetime.
Sources & references
Authoritative UK government, HMRC, statute and Citizens Advice sources. Last reviewed: 31 May 2026.
Start with a Will
Most estates are protected with a well-made Will — ClearLegacy Wills are £89 (single) or £129 (mirror), usually delivered in 24 hours. If your situation needs a trust, a STEP-qualified solicitor is the right route.
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