Trusts are key in estate planning for managing and protecting assets — both during your lifetime and after you pass away. A trust lets trustees hold and manage assets for the benefit of beneficiaries. The settlor, who sets up the trust, decides how the assets are used through a document called the trust deed.
Trusts help protect family assets from the modern threats: care fees, divorce, creditors, probate delays, and inheritance tax. England invented trust law over 800 years ago — when knights going off to the Crusades would say to their trusted friend, “Hold my land while I’m away. Make sure my wife and children are looked after.” That principle still protects families today. For more on protecting your estate with trusts, check out our page on using trusts for inheritance tax planning.
Key Takeaways
- Trusts are legal arrangements for managing assets on behalf of beneficiaries — they’ve been used in England for over 800 years.
- The most common reasons to use trusts for inheritance are care fee protection, divorce protection, bypassing probate delays, and reducing inheritance tax.
- The most widely used trust type in the UK is the discretionary trust (around 98–99% of trusts settled).
- Understanding the difference between lifetime trusts and will trusts — and between discretionary, bare, and interest in possession trusts — is essential for effective inheritance planning.
- Trusts offer control, clarity, and protection for your loved ones for up to 125 years.
What is a Trust and How Does It Function?
Understanding trusts is key when planning for inheritance. A trust is a legal arrangement — not a legal entity — that separates legal ownership from beneficial ownership. The trustees hold legal title to the assets, while the beneficiaries enjoy the benefits. The trust itself has no separate legal personality — it is the trustees who own and act.
Definition of a Trust
A trust is established when the settlor transfers assets to trustees, who then manage them for the benefit of the beneficiaries according to the rules set out in the trust deed. You need a minimum of two trustees, and the same person can be the settlor, a trustee, and a beneficiary — meaning you can stay in control of your assets day-to-day.
The trust deed is the founding legal document. Because trusts are important legal instruments, the wording needs to be precise without any room for ambiguity. It sets out who the trustees and beneficiaries are, what powers the trustees have, and how the assets should be managed and distributed.
Key Components of a Trust
- The settlor — creates the trust and transfers assets into it.
- The trustees (minimum of two) — take legal ownership and manage the assets according to the trust deed. The settlor can also be a trustee, which keeps you in control. But you should also include trustees who are likely to outlive the settlor — usually adult children or younger family members.
- The beneficiaries — those who benefit from the trust. Trustees can also be beneficiaries.
- The trust deed — the legal document that governs the trust.
Types of Trusts Relevant to Inheritance
Trusts come in different forms, each suited to different inheritance planning goals. In the UK, there are two main ways to classify trusts.
First, by when they take effect:
- Lifetime trusts — established while you’re alive. Assets bypass probate entirely, and depending on the trust type, the transfer can start the 7-year clock for IHT purposes immediately. A lifetime trust can be revocable (changeable) or irrevocable (fixed) — but for IHT and asset protection purposes, irrevocable is almost always the recommended approach.
- Will trusts (testamentary trusts) — created through a will and only take effect after death. Commonly used to protect assets for children in blended family situations, preventing sideways disinheritance.
Second, by how they operate:
Discretionary Trusts
Discretionary trusts are by far the most commonly used trust in the UK — around 98–99% of trusts settled are discretionary. The trustees have full power to decide what income or capital is paid out, which beneficiary receives it, how often, and under what conditions.
This is what makes discretionary trusts so powerful for inheritance planning. Because no single beneficiary has an automatic right to the assets, the trust provides strong protection from care fees, divorce, creditors, and litigation. If your son or daughter goes through a divorce, the answer is simple: “What house? I don’t own a house.” The trust owns it. A discretionary trust can last up to 125 years in England and Wales — meaning your wealth can cascade down through future generations within the bloodline.
Bare Trusts
A bare trust is the simplest type. The beneficiary has an absolute right to the capital and income at age 18 (16 in Scotland). The principle established in the case of Saunders v Vautier means that once the beneficiary reaches majority, they can collapse the trust entirely and take the assets outright. The trustee is merely a nominee with very little discretion. Bare trusts can be useful for holding assets for minors, but they are not IHT-efficient — assets are treated as belonging to the beneficiary for tax purposes — and they offer no meaningful protection from care fees or divorce.
Interest in Possession Trusts
An interest in possession trust has two types of beneficiary. The income beneficiary (known as the “life tenant”) receives the income generated from the trust assets — or the right to live in a property rent-free — while the capital beneficiary (the “remainderman”) inherits the actual assets when the income beneficiary’s interest ends. This structure is commonly used in wills where one partner leaves the surviving spouse the right to benefit from the estate, with assets passing to children on second death — preventing sideways disinheritance where assets end up with a new partner’s family instead of the settlor’s bloodline.
It’s worth noting that interest in possession trusts created after March 2006 are generally treated under the relevant property regime for IHT purposes, unless they qualify as an immediate post-death interest (IPDI) or a disabled person’s interest.
Revocable vs Irrevocable Lifetime Trusts
Within lifetime trusts, the distinction between revocable and irrevocable is critical — especially for inheritance tax and asset protection:
| Feature | Revocable Lifetime Trust | Irrevocable Lifetime Trust |
|---|---|---|
| Flexibility | Can be changed or revoked by the settlor | Cannot be altered once established (unless the trust deed includes Standard and Overriding powers, which give trustees certain defined powers without making the trust revocable) |
| IHT Treatment | Assets remain in the settlor’s estate — HMRC treats this as a settlor-interested trust with no IHT benefit | Assets can fall outside the estate after 7 years — significant potential IHT savings |
| Asset Protection | Weaker — because the settlor retains the power to reclaim assets, courts and creditors can potentially access them | Stronger — assets are no longer personally owned by the settlor |
| Care Fee Protection | Limited — local authority can argue the settlor still controls the assets | Stronger — assets sit outside the settlor’s personal estate |
For inheritance planning, an irrevocable discretionary lifetime trust is almost always the recommended choice. A home can be placed in an irrevocable trust and the settlor can continue to live in it — provided the trust is properly structured — protecting the home from care fees, divorce, and IHT.
The Role of a Trustee in Managing a Trust
Trustees are key in managing trusts. It’s all in the title — “trustee.” Do you trust them to do the job?
Responsibilities of a Trustee
Trustees must manage trust assets in the best interests of the beneficiaries and in accordance with the trust deed. Their responsibilities include:
- Managing trust assets prudently — including property insurance, maintenance, and investment decisions
- Distributing or appointing assets to beneficiaries as the trust deed directs
- Filing trust tax returns (SA900) with HMRC when required
- Ensuring the trust is registered on the Trust Registration Service (TRS) within 90 days of settlement
- Keeping accurate records and minutes of all trustee decisions
- Conducting annual reviews to ensure the trust remains aligned with the settlor’s wishes and current legislation
Choosing the Right Trustee
You need a minimum of two trustees. The settlor can be a trustee (keeping control), but you should also include trustees who are likely to outlive the settlor — usually adult children or other younger family members. Having a clear process for removing and replacing trustees is also important for long-term trust management, and a letter of wishes can provide guidance to trustees about the settlor’s intentions without creating binding obligations.
Consider: are they trustworthy? Are they competent? Will they act in the best interests of the beneficiaries? For complex situations, a professional trustee may be appropriate — but for most family trusts, family members who understand the settlor’s wishes are the right choice.
How Trusts Help with Inheritance Tax
Understanding how trusts interact with inheritance tax is essential for effective estate planning in the UK. IHT is charged at 40% on estates above the nil rate band of £325,000 — one of the steepest taxes going. The nil rate band has been frozen since 2009 and is confirmed frozen until at least April 2031, while property values have soared — meaning ordinary homeowners who never considered themselves wealthy are now caught by IHT. The average home in England is now worth around £290,000, so a homeowner with modest savings and a pension is already well above the threshold.
Understanding Inheritance Tax in the UK
Key IHT allowances and reliefs include:
- Nil rate band (NRB) — £325,000 per person. Frozen since 2009 and confirmed frozen until at least April 2031. Estates below this pay no IHT. Any unused NRB can transfer to a surviving spouse or civil partner.
- Residence nil rate band (RNRB) — an additional £175,000 per person, but only if you leave your main residence to direct descendants (children, grandchildren, step-children). It is not available when leaving property to nephews, nieces, siblings, friends, or charities. Also frozen until April 2031. Tapers away by £1 for every £2 your estate exceeds £2,000,000.
- Transferable allowances — married couples and civil partners can combine allowances for a potential £1,000,000 tax-free threshold (£650,000 NRB + £350,000 RNRB).
- Spouse/civil partner exemption — transfers between spouses are generally exempt from IHT.
- Annual gift exemption — £3,000 per tax year, with one year carry-forward. Plus £250 small gifts per recipient (cannot combine both for the same person). Wedding gifts: £5,000 from a parent, £2,500 from a grandparent, £1,000 from anyone else.
- Charitable donations — leaving 10%+ of your net estate to charity reduces the IHT rate from 40% to 36%.
For official guidance, visit the UK Government’s page on trusts and inheritance tax.
Tax Benefits of Establishing a Trust
Trusts can be a tax-efficient planning tool — but only if they’re the right type and properly structured:
- Irrevocable discretionary trusts — transferring assets into the trust is a chargeable lifetime transfer (CLT). If the value is within the available nil rate band (£325,000), there is no entry charge. Survive 7 years and the assets should fall outside your estate for IHT. Taper relief applies between years 3 and 7 — but only where gifts exceed the NRB.
- Bare trusts — NOT IHT-efficient. Assets are treated as belonging to the beneficiary, not sheltered from IHT.
- Revocable trusts — no IHT benefit. HMRC treats them as settlor-interested trusts, meaning the assets remain in the settlor’s estate.
- Life insurance into trust — having your life insurance payout directed into a trust (typically free to set up) means the payout bypasses the estate entirely, potentially saving 40% IHT on the policy value.
It is a common misconception that putting assets in a trust automatically avoids inheritance tax. This is not the case — trusts are tax-efficient planning tools, not tax avoidance schemes. But with careful planning and the right structure, significant savings can be achieved.
Important warning: if you gift your home and continue to live in it rent-free, HMRC calls this a gift with reservation of benefit (GROB). The home stays inside your estate for IHT purposes — even if you survive 7 years. There is also the Pre-Owned Assets Tax (POAT) to consider, which can apply as an annual income tax charge in certain circumstances. A properly structured trust — such as a Gifted Property Trust — can navigate these rules while still allowing you to benefit from the property.
Discretionary trusts are subject to the relevant property regime: a potential entry charge of 20% on transfers above the available nil rate band (for most family homes under £325,000, this means zero entry charge), periodic 10-year charges (maximum 6% of trust property above the NRB — again, often zero for family homes below the threshold), and exit charges when assets are appointed to beneficiaries (proportional to the last periodic charge — typically less than 1%). These are the trade-off for the powerful protection and IHT planning that discretionary trusts provide.
Setting Up a Trust: The Process Explained
Creating a trust for inheritance is key to making sure your assets go where you want and are protected from the modern threats. Plan, don’t panic — but do plan early.
Initial Considerations
First, determine what you want the trust to achieve. The most common reasons are:
- Care fee protection — between 40,000 and 70,000 homes are sold annually to fund care in the UK. Average care costs run to £1,100–£1,500 per week or more depending on location. You must plan years before there’s a foreseeable need for care — you cannot transfer assets after a care need has arisen or is reasonably foreseeable.
- Divorce protection — with a UK divorce rate of around 42%, protecting your children’s inheritance from their future relationship breakdown is essential.
- Bypassing probate delays — lifetime trust assets pass instantly to beneficiaries, avoiding the probate process which can take 9–18 months when property is involved. During that time, sole-name bank accounts are frozen, property cannot be sold, and creditors are paid before beneficiaries.
- Inheritance tax reduction — transferring assets into an irrevocable trust starts the 7-year clock, potentially removing them from your estate for IHT.
- Protecting vulnerable beneficiaries — minors, people with disabilities, or those who may not manage money well. A discretionary trust can also help protect means-tested benefits.
Drafting the Trust Deed
The trust deed is the founding legal document. It must be precise and unambiguous, setting out the rules, powers, trustees, and beneficiaries. Getting specialist advice is essential — the law, like medicine, is broad. You wouldn’t want your GP doing surgery. A specialist estate planner who handles trusts every day will produce a far better result than a general high street solicitor who does a bit of everything.
Funding the Trust
Signing the trust deed is not enough — you must actually transfer assets into the trust. For property:
- No mortgage — use a TR1 form to transfer legal title into the names of the trustees, plus an RX1 form to place a restriction on the title at Land Registry. Up to four trustees can be named on a property title.
- With mortgage — use a Declaration of Trust to transfer the beneficial interest only. You cannot move legal title without the mortgage lender’s consent, as it would breach your mortgage terms. Over time, the mortgage balance reduces while the property value increases — all that growth happens inside the trust.
This distinction between legal and beneficial ownership is the very foundation of English trust law — it’s the principle that has protected families for over 800 years.
HMRC doesn’t care about good intentions. If the asset wasn’t transferred, it’s still in your name and fully exposed to IHT, care fees, and probate.
Registering the Trust
All UK express trusts — including bare trusts — must be registered on HMRC’s Trust Registration Service (TRS) within 90 days of creation. This is a legal requirement under the money laundering regulations, not optional. Importantly, the TRS register is not publicly accessible (unlike Companies House), so your trust details remain private. Filing property transfers with HM Land Registry is a regulated activity requiring a solicitor or licensed conveyancer.
The cost of setting up a trust starts from around £850 for straightforward cases, typically ranging from £850 to £2,000 or more depending on complexity. When you compare that to the cost of care fees — £1,100 to £1,500 per week, ongoing until the estate is depleted to £14,250 — a trust is one of the most cost-effective forms of protection available. A one-time setup fee versus potentially years of care costs is not a difficult comparison.
Distributing Assets: How Trusts Work After Death
How assets are distributed after death depends fundamentally on whether they’re held in a lifetime trust or a will trust — and on the type of trust.
Lifetime Trust Assets
When you pass away with assets in a lifetime trust, those assets are never frozen because nothing is in your personal name. There is no need for a Grant of Probate. The trustees can act immediately — distributing, managing, or holding the assets according to the trust deed. This saves your family the lengthy probate process, during which time sole-name bank accounts are frozen, property can’t be sold, creditors are paid first, and HMRC takes its share before anything reaches your loved ones. Not losing the family money provides the greatest peace of mind above all else.
Will Trust Assets
Assets directed into a will trust must first go through probate. Once a Grant of Probate is obtained from the Probate Registry, the executors transfer the assets into the trust, and the trustees then manage them according to the will trust terms. This process typically takes 6 to 12 months but can stretch to 18 months or more for complex estates or where property needs to be sold.
Distribution by Trust Type
| Trust Type | How Distribution Works | Timing |
|---|---|---|
| Discretionary Trust | Trustees decide who benefits, when, and how much — maximum flexibility and protection | Lifetime trust: immediately. Will trust: after probate. |
| Bare Trust | Beneficiary has absolute right to assets at age 18 — trustee has virtually no discretion | Automatic on reaching 18 |
| Interest in Possession Trust | Income beneficiary (life tenant) receives income or use of property; capital passes to capital beneficiary (remainderman) when income interest ends | Income: ongoing. Capital: typically on death of income beneficiary. |
Deed of Variation
Even if someone dies with only a will (no trust), beneficiaries can redirect their inheritance into a trust using a Deed of Variation — provided it’s executed within two years of the date of death. This allows them to enjoy the benefits of the inheritance without the liabilities: care fee exposure, divorce risk, creditor claims, and their own future IHT liability. The money stays in the bloodline.
Trusts and Wills: Key Differences
Trusts and wills are both essential in estate planning, but they serve very different purposes. You need both.
Key Differences
| Feature | Lifetime Trust | Will |
|---|---|---|
| When it takes effect | Immediately — during your lifetime | Only after death |
| Probate | Bypasses probate entirely — assets pass instantly to trustees who can act immediately | Must go through the Grant of Probate process (currently several months minimum, often longer with property) |
| Privacy | Trust deed is a private document — not publicly accessible. The TRS register is also not open to the public | Becomes a public document once the Grant of Probate is issued — anyone can request a copy for a small fee |
| Care Fee Protection | Assets sit outside your personal estate — stronger protection from local authority care fee assessments | Assets remain fully in your estate — exposed to care fee assessments above the £23,250 threshold |
| Divorce Protection | Assets are legally owned by the trustees, not by any individual beneficiary — protected from divorce settlements | Assets pass outright to beneficiaries — fully exposed to their future divorce |
| IHT Planning | Can reduce IHT — irrevocable trusts start the 7-year clock immediately | Will trust only takes effect after death — limited IHT planning opportunity |
| Incapacity | Trustees can continue to manage assets if the settlor loses mental capacity — no court involvement needed | No effect during lifetime — a Lasting Power of Attorney (LPA) would be needed separately |
Advantages of Using Trusts for Inheritance
A will alone leaves your estate exposed to all the modern threats. Everyone needs a will — it’s essential for appointing guardians for minor children and distributing assets not held in trust. But a lifetime trust provides protection during your lifetime, bypasses probate, and can reduce IHT. The two should work together, not replace each other.
Key benefit of a will: it can appoint guardians for minor children — a trust does not do this. Key benefits of a trust: zero probate waiting time, care fee protection, IHT reduction, divorce protection, creditor protection, and litigation protection. Keeping families wealthy strengthens the country as a whole.
Legal Considerations and Compliance
It’s vital to understand the legal framework for trusts in England and Wales for effective trust inheritance planning.
Relevant Legislation
Key legislation includes:
- Trustee Act 2000 — sets out trustees’ powers and duties, including the statutory duty of care and the power to invest trust assets.
- Inheritance Tax Act 1984 — governs how trust assets are treated for IHT, including the relevant property regime for discretionary trusts, chargeable lifetime transfers, and the 7-year rule.
- Perpetuities and Accumulations Act 2009 — allows trusts created under English law to last for up to 125 years.
- Trust Registration Service (TRS) — all UK express trusts (including bare trusts) must be registered with HMRC within 90 days of creation under the money laundering regulations.
- Land Registration Act 2002 — governs the registration of property transfers into trust at HM Land Registry.
For more information, visit MP Estate Planning.
Common Legal Pitfalls to Avoid
- Creating the trust but never funding it. HMRC doesn’t care about good intentions — if the asset wasn’t transferred, it’s still in your name and fully exposed.
- Attempting to transfer legal title with a mortgage without lender consent. This breaches your mortgage terms. Use a Declaration of Trust to transfer the beneficial interest instead — legal title stays with you until the mortgage is cleared.
- Forgetting to register with TRS. All trusts must be registered within 90 days. Penalties can apply for late registration.
- Gifting your home and continuing to live in it rent-free. This triggers the gift with reservation of benefit (GROB) rule — the home stays in your estate for IHT even after 7 years. A properly structured trust can navigate this.
- Using the wrong type of trust. Bare trusts are not IHT-efficient. Revocable trusts offer no IHT benefit because HMRC treats them as settlor-interested. For inheritance planning, an irrevocable discretionary trust is almost always recommended.
- Using a general solicitor instead of a specialist. The law, like medicine, is broad — you wouldn’t want your GP doing surgery. Deal with a specialist estate planner who handles trusts every day and understands the interaction between IHT, property, and trust law.
- Transferring assets after a foreseeable need for care has arisen. If a local authority can show that avoiding care fees was a significant operative purpose, they can treat you as still owning the asset — there is no fixed time limit on this. Plan years in advance.
Common Misconceptions and Myths
Myth-Busting
| Myth | Reality |
|---|---|
| “Trusts are only for the wealthy.” | Trusts are not just for the rich — they’re for the smart. The far more common problems trusts solve are care fee protection (average £1,100–£1,500/week) and divorce protection (around 42% divorce rate). These affect ordinary families. With the average home in England now worth around £290,000, most homeowners have assets worth protecting. |
| “Putting assets in a trust automatically avoids IHT.” | Not true. Trusts are tax-efficient planning tools, not tax avoidance schemes. Only irrevocable trusts can help with IHT — and only after the 7-year rule. Bare trusts and revocable trusts offer little or no IHT benefit. |
| “I’ll lose control of my assets.” | If you’re a trustee of your own trust, you remain in control day-to-day. You no longer legally own the assets, but you control how they’re managed and distributed. |
| “Trusts are too expensive.” | A straightforward trust starts from around £850. When you compare that to average care fees of £1,100–£1,500 per week — which continue until your estate is depleted to £14,250 — the trust is one of the most cost-effective forms of protection available. |
| “Trusts are too complicated.” | With the right specialist, setting up a trust is straightforward. Ongoing management involves annual reviews, record-keeping, and SA900 tax filing when required. A good estate planner will guide you through the whole process. |
| “I can gift my home and keep living in it to avoid IHT.” | Wrong. HMRC calls this a gift with reservation of benefit (GROB). The home stays in your estate. A properly structured trust — such as a Gifted Property Trust — can achieve this legally. |
Clarifying the Basics
Trusts are not just for the rich — they’re for the smart. They’ve been used in England for over 800 years because they work. The ultra-wealthy don’t use trusts because they’re fancy — they use them because they protect assets and keep wealth within the bloodline. With the nil rate band frozen since 2009 and the average home in England now worth around £290,000, ordinary families need the same protection. If you can’t beat them, why not join them?
FAQ
What is a trust and how does it work for inheritance?
A trust is a legal arrangement — not a legal entity — where the settlor transfers assets to trustees (minimum of two), who manage them for the benefit of beneficiaries according to the trust deed. For inheritance, trusts can bypass probate delays, protect assets from care fees and divorce, and help reduce IHT when properly structured.
What are the main types of trusts used for inheritance in the UK?
The three main types by how they operate are discretionary trusts (most common — around 98–99%), bare trusts, and interest in possession trusts. Trusts are also classified as lifetime trusts (take effect during your lifetime) or will trusts (take effect on death). Within lifetime trusts, the key distinction is whether they are revocable or irrevocable — with irrevocable being essential for IHT and asset protection benefits.
How do trusts reduce inheritance tax?
An irrevocable discretionary trust starts the 7-year clock. Survive 7 years and the assets should fall outside your estate for IHT. Taper relief applies between years 3 and 7, but only where gifts exceed the nil rate band of £325,000. Bare trusts and revocable trusts do NOT provide meaningful IHT benefits. Trusts are tax-efficient planning tools — not tax avoidance schemes.
What is the gift with reservation of benefit (GROB)?
If you gift your home and keep living in it rent-free, HMRC treats it as a GROB — the home stays in your estate for IHT even after 7 years. Exceptions exist (such as paying full market rent or the donor becoming dependent through illness), but a properly structured trust — such as a Gifted Property Trust — can navigate these rules legally.
What are the responsibilities of a trustee?
Trustees must manage assets in the best interests of beneficiaries, file SA900 tax returns with HMRC when required, register the trust on TRS within 90 days of creation, keep records and minutes of all decisions, and conduct annual reviews to ensure the trust remains aligned with the settlor’s wishes and current legislation.
How do trusts work after the settlor dies?
Lifetime trust assets pass instantly — no probate needed. The trustees can act immediately because the assets are not in the deceased’s personal name. Will trust assets must go through probate first (requiring a Grant of Probate from the Probate Registry, which can take several months or longer), then transfer into the trust.
What is a Deed of Variation?
A Deed of Variation allows beneficiaries to redirect inherited assets into a trust within two years of death — protecting the inheritance from care fees, divorce, creditor claims, and the beneficiary’s own future IHT liability. It’s a powerful tool when the deceased didn’t set up a lifetime trust.
What is the difference between a trust and a will?
You need both. A will takes effect only after death, goes through probate, and becomes a public document once the Grant is issued. A lifetime trust is effective immediately, bypasses probate entirely, remains private, and protects against care fees, divorce, creditors, and IHT during your lifetime. A will is essential for appointing guardians for minor children and dealing with assets not held in trust.
Are trusts only for the wealthy?
No. Trusts are not just for the rich — they’re for the smart. The most common problems trusts solve — care fee protection (average £1,100–£1,500/week) and divorce protection (around 42% divorce rate) — affect ordinary families. With the average home in England now worth around £290,000, most homeowners have assets well worth protecting. Trusts have been used in England for over 800 years.
How do I set up a trust for inheritance?
Consult a specialist estate planner (not a general solicitor — the law is broad, and you need someone who handles trusts every day). Choose your trustees (minimum of two), have the trust deed professionally drafted, fund the trust by actually transferring assets (TR1 form or Declaration of Trust for property), and register with HMRC’s Trust Registration Service within 90 days. Costs start from around £850 for straightforward cases.
Can I still live in my home if it’s in a trust?
Yes. A home can be placed in an irrevocable lifetime trust and the settlor can continue to live in it — provided the trust is properly structured to navigate the GROB rules. This is exactly what products like the Family Home Protection Trust and Gifted Property Trust are designed to achieve.
How can trusts provide for vulnerable beneficiaries?
A discretionary trust allows trustees to manage assets for minors, people with disabilities, or those who may not manage money well. The trustees decide when and how to make distributions, ensuring the beneficiary’s wellbeing without giving them direct control over the assets. This can also help protect means-tested benefits, as the beneficiary has no automatic right to the trust assets — the trustees hold that discretion.