Planning your estate is one of the most important steps you can take to protect your loved ones and ensure your wishes are carried out. One of the most effective tools for safeguarding your estate is a Will Trust. It enables you to specify exactly how your assets should be managed and distributed after your death.
At Elizabeth Middleton Solicitors, we specialise in helping individuals and families use Wills to ring-fence their estates to minimise risk, avoid unnecessary costs such as care home fees or tax liabilities, and preserve your wealth for future generations.
1. What is a Will Trust?
A Will Trust is written into your Will and only comes into effect after your death. It enables you to specify how certain assets in your estate should be managed and who should benefit from them.
Unlike a standard Will, which typically distributes your assets directly to your chosen beneficiaries, a Will Trust provides an extra layer of control and protection. With this arrangement, your assets are placed into a Trust and managed by appointed Trustees. These Trustees are responsible for looking after the assets on behalf of your chosen beneficiaries, in line with the instructions you have set out in your Will.
Common Assets Placed into a Will Trust
- Property, such as your family home
- Savings and cash assets
- Investments, including shares or bonds
Key Parties Involved in a Will Trust
- Testator – the person who creates the Will and sets up the trust
- Trustees – the individuals (or professionals) you appoint to manage the trust and its assets according to your wishes
- Beneficiaries – the people who will benefit from the trust, either through income, access to property, or eventually receiving the capital
2. Main Types of Will Trusts
There is no one-size-fits-all when it comes to estate planning, which is why different types of Will Trusts exist to serve different purposes. These are the main types of Will Trusts commonly used in the UK:
Discretionary Trusts
A Discretionary Trust gives your chosen Trustees the power to decide how, when, and to whom the assets within the trust are distributed. This means the beneficiaries do not have an automatic right to any assets. Decisions are made based on their circumstances at the time.
This type of trust is particularly suitable for:
- Families with vulnerable or financially irresponsible beneficiaries.
- Situations where future needs are uncertain or may change over time.
- Parents or grandparents who wish to support children or grandchildren in a flexible and adaptable way.
Interest in Possession Trusts
An Interest in Possession Trust allows one person (known as the life tenant) to benefit from the income or use of an asset – typically a property – for the duration of their life. After their death, the asset passes to another beneficiary, often children from a previous relationship.
Bare Trusts
In a Bare Trust, the assets are held in the name of a trustee, but the beneficiary has an absolute right to the trust’s contents once they reach 18. Unlike other trusts, the trustees have no discretion. Once the child comes of age, they are entitled to take full control of the assets.
Property Protection Trusts
One of the most practical and widely used trusts in estate planning, a Property Protection Trust is designed to safeguard the family home, especially in the event a surviving spouse remarries or needs long-term care.
Typically used by couples who jointly own a property, the trust allows one partner’s share of the home to be ring-fenced for their children, even if the surviving partner continues living in the property.
Disabled or Vulnerable Beneficiary Trusts
If you have a child or loved one with a disability or long-term condition, a standard inheritance could unintentionally disrupt their access to means-tested benefits or public support. A Disabled or Vulnerable Beneficiary Trust allows you to provide for them financially while preserving their entitlement to state support.
3. Why Consider a Will Trust?
By setting up a Will Trust, you ensure that your estate is managed responsibly, and that your legacy is protected and passed on exactly as you intended.
Ring-Fencing Your Estate
One of the most compelling reasons to consider a Will Trust is to ring-fence your estate. This means placing legal protections around your assets to stop them from being eroded by:
- Care home fees.
- Remarriage of a surviving spouse.
- Family disputes or divorce settlements.
- Creditors in the event of bankruptcy.
Control Over Asset Distribution
A Will Trust allows you to maintain greater control over how your estate is distributed. This is especially valuable if you have:
- Young children or grandchildren
- Beneficiaries with financial difficulties or poor money management
- Loved ones with disabilities or special needs
You can specify how much each beneficiary receives and when, helping protect them from making poor financial decisions or being exploited.
Tax Efficiency
Some types of Will Trusts may offer inheritance tax planning opportunities, helping to reduce the tax burden on your estate. Although trusts are subject to their own tax rules, they can be structured to manage liabilities more effectively, particularly in larger estates or where multiple generations are involved.
Flexibility for the Future
Life is unpredictable. One of the strengths of a Will Trust, particularly a Discretionary Trust, is that it offers built-in flexibility. Your Trustees can respond to changing circumstances, such as a beneficiary losing employment, developing a health condition, or needing support at a later stage in life.
How Elizabeth Middleton Solicitors Can Help
At Elizabeth Middleton Solicitors, we specialise in Wills, Trusts and Estate Planning, offering expert guidance tailored to your unique circumstances. We take the time to explain your options with professionalism and compassion so you can make informed decisions with confidence.
Contact us today and let us help you put your affairs in order and secure your legacy.
