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Making plans for the future to make sure your loved ones are looked after once you’re gone? If you’re thinking about making a trust and whether you’d benefit from setting one up as part of your will, this guide might help. We’ve outlined how a trust works in a will, what a will trust can be used for and the different types of trust that could benefit you. 

What is a trust? 

A trust is a legal agreement that you can create to make sure your money, belongings or property are held (looked after) and managed by someone else (the trustee). This is so that the person or people who will receive a share of your assets (the beneficiaries) are protected. For example, you might want to put aside savings for your children to use in the future. When you put your savings into a trust for this purpose, you can make sure they’ll receive the money and use it as you intended when they reach a certain age.  

A trustee has a legal duty of care towards the beneficiaries of a will. This means that they have to look after and act in the best interests of the beneficiaries at all times.
Emma Mulholland Legal Content Expert

What is a will trust? 

You can set up a trust as part of your will. This is sometimes referred to as a will trust or trust will. It’s the same type of legal agreement that we mentioned above but when it’s part of your will, it will come into effect when you pass away. Lots of people choose to set up a trust as part of their will so that they’re confident their beneficiaries are financially protected when they’re no longer around to do this themselves. 

How does a trust work in a will? 

When writing a will, you usually name beneficiaries who’ll receive a share of your estate when you pass away. But when you put your will into a trust that means that you can outline certain situations where the beneficiaries won’t receive their share when you pass away. Instead, their share will be held for them by a trustee until the circumstances you outlined are met. 

What can a will trust be used for? 

Will trusts can be made to fit the specific needs of you and your estate. But some common reasons to put your will into trust include: 

  • Financially providing for loved ones who are vulnerable after you’re gone, for example, if your child has a learning disability 
  • Protecting property (or income from your property) so that your spouse, for example, can rent out the property that’s in trust after you pass away 
  • Funding higher education for your children or grandchildren 
  • Making sure your children from a previous relationship are financially protected 
  • Protecting your property from being used for care home fees by your local authority 

Different types of will trusts 

Below we’ve outlined how different types of will trusts work and when you could benefit from using them. This list doesn’t cover everything but could give you an idea of which might be best for you based on the most common situations. 

Bare trust will 

This is the simplest type of trust will and is also known as an absolute trust. It means that you can leave assets to a beneficiary as long as they’re aged 18 or older. The assets can be managed by a trustee until the beneficiary reaches 18 years of age. It’s a good way of making sure that children or grandchildren benefit from your will when they’re old enough to manage it. 

Property trust will 

A property trust will, sometimes known as a protective property trust, is useful if you own a property (or a share of it). It helps you protect its value so that your spouse or civil partner can benefit from it when you pass away. 

In practical terms, this means that the person you’ve named as beneficiary will be able to continue living in the property that’s named in the trust. Or they could potentially rent it out for a regular income. If the property in the trust is sold, then the beneficiary would be entitled to the income that comes from the sale. 

You might want to think about a property trust will if you own a house with your spouse or civil partner and: 

  • You want to make sure that the value of the property is protected for your children (or another beneficiary) if your surviving spouse or civil partner remarries. 
  • You want to make sure that the value of the property is protected for your beneficiaries if your surviving spouse makes a new will after your death and potentially passes on your property to someone you didn’t know or want to pass it onto. 
  • You want to reduce the possibility of the value of the property being used for care home fees if your surviving spouse or civil partner needs care in the future. 

Life interest trust will 

This type of trust will is similar to a property trust will. But you can use it to put other assets into trust, as well as your house. This could be jewellery, antiques, investments or shares, or anything else of value that you’d like to protect and pass onto loved ones.  

With a life interest trust, there’s usually a “life tenant”. This is the person who will get an income from the trust for their lifetime. This could mean that they live in the property that has been put into the trust until they pass away. After this, the property will then pass onto the named beneficiaries. 

This type of trust will is commonly used by people so that their spouse or civil partner from their second marriage is financially protected or can continue living in their house for the rest of their life. But when they pass away the property will then pass onto the children from the first marriage, or from both marriages.  

You might want to think about a life interest will if: 

  • You want to make sure that a loved one is financially protected for the rest of their life (such as your spouse) but you also want to pass your assets onto future generations. 
  • You want to protect the value of your assets and/or property so that the future generation can benefit from it when they’re older. 

Discretionary trust will 

With a discretionary trust will, the trustees named are responsible for what happens to the assets in the trust. They can decide how and when the beneficiaries receive their share of the estate. In fact, a group of people are usually named as “potential” beneficiaries of the trust. So the trustees are given the responsibility to decide who receives assets too.  

The flexibility of a discretionary trust will makes it useful when the person making it can’t decide exactly what to do with the assets. For example, a grandparent might name their grandchildren as beneficiaries so that they benefit from the assets in the future but name the grandchildren’s parents as trustees. This means that the parents can make the final decision as to how the assets are shared out or used so that the grandchildren can fully benefit from it. 

You might want to think about a discretionary trust will if: 

  • You’d like to give someone else close to you the responsibility of deciding who, out of the potential beneficiaries, should receive a share of your estate, and how and when they receive it. 
  • You’d like to leave a share of your estate to a loved one who’s vulnerable but give someone close to them the responsibility of helping them manage it. 
  • You’d like to leave a share of your estate to a loved one who has a disability but want to make sure this won’t impact their state benefits if they receive an inheritance. 

It may be worth knowing that if you’d like to leave an inheritance for a loved one who’s vulnerable or who lives with a disability then you can also make a trust specifically for vulnerable beneficiaries. This type of trust is given special tax treatment so that the beneficiaries can get their share of the estate without paying as much tax on the income. 

How do you set up a trust in your will? 

Setting up a trust as part of your will should not be done before carefully considering what exactly you want to get from it and who your trustees should be. Making these decisions is important because once certain types of trust have been set up, they can’t be reversed. So, make sure you take the time you need to think about what assets or property you’d like to protect and pass down, and who you trust enough to manage it.  

It’s also worth getting advice from a solicitor who specialises in wills and probate. They’ll be able to talk through all your options and the pros and cons of each so you can make an informed decision. They’ll also be able to give you advice on things like inheritance tax and capital gains tax when it comes to the type of will trust you’re thinking about.  

If you live in England or Wales, you can find a solicitor on the Law Society website here. If you live in Scotland, you can find a solicitor on The Law Society of Scotland’s website here or if you live in Northern Ireland, you can search for one on the Law Society of Northern Ireland’s website here

Once you’ve decided which type of trust will is the right option for you, you’ll need to outline: 

  • What the assets are 
  • Who the trustees are 
  • Who the beneficiaries are 

A solicitor can help you set all of this out using the correct legal jargon. This will make certain that no mistakes are made. That way you can be sure that, when the time comes, your final wishes are carried out in the way you’d like. 

Disclaimer: The contents of this article is intended as information only and does not constitute legal advice. Always seek advice from a specialist solicitor when you need support with wills and probate

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