Who Controls the Assets in a Trust After You Die in the UK?

When it comes to estate planning, trusts play a crucial role in ensuring that your assets are protected and distributed according to your wishes after you pass away. However, many people are unclear about who controls the assets in a trust after they’re gone — and this uncertainty can lead to poor planning decisions.

In the UK, the control of trust assets is a fundamental consideration. After the settlor’s death, it is the trustees — not executors — who manage trust assets. The trustees are responsible for carrying out the instructions set out in the trust deed, ensuring that assets are managed and distributed to the beneficiaries as intended. Executors deal with the will and the probate estate; trustees deal with the trust. These are separate roles, even though the same person can sometimes hold both.

Understanding how trusts work and who holds control after death can help you make informed decisions about your assets and ensure that your loved ones are properly protected. As Mike Pugh, founder of MP Estate Planning, often says: “Trusts are not just for the rich — they’re for the smart.”

Key Takeaways

• Trusts play a crucial role in estate planning in the UK, providing protection that a will alone cannot offer.
• After the settlor’s death, the trustees are responsible for managing and distributing trust assets — not executors.
• Understanding who controls trust assets is essential for effective estate planning and family protection.
• Trust assets bypass the probate process entirely, meaning trustees can act immediately without waiting months for a Grant of Probate.
• A clear understanding of trust control can help protect your loved ones from inheritance tax, care fees, divorce, and family disputes.

Understanding Trusts in the UK

Understanding trusts is crucial for anyone looking to secure their assets and ensure their loved ones are taken care of. England invented trust law over 800 years ago, and trusts remain one of the most powerful legal arrangements available for protecting family wealth. They offer a flexible and effective way to manage and distribute assets according to your wishes, providing genuine peace of mind for the future.

What is a Trust?

A trust is a legal arrangement — not a legal entity — where one party, known as the settlor, transfers assets to trustees to hold and manage for the benefit of the beneficiaries. The trustees become the legal owners of the assets, but they hold them subject to the terms of the trust deed and owe a fiduciary duty to act in the best interests of the beneficiaries.

A trust is founded on the critical distinction between legal ownership (held by the trustees) and beneficial ownership (held by or for the beneficiaries). This separation is the foundation of English trust law and is what gives trusts their protective power.

Trusts can be established for various purposes, including estate planning, inheritance tax (IHT) efficiency, care fee protection, and providing for vulnerable individuals. By placing assets in a trust, you can ensure that your wishes are carried out after you pass away — and crucially, that those assets are shielded from threats like care fees, sideways disinheritance, and divorce.

Types of Trusts Established

In the UK, trusts are first classified by when they take effect: a lifetime trust (created during the settlor’s lifetime) or a will trust (created on death through the will). They are then classified by how they operate:

• Discretionary Trusts: The most common type of trust used in estate planning (around 98-99% of family trusts). Trustees have absolute discretion over how income and capital are distributed among beneficiaries. No beneficiary has a fixed right to anything — and this is precisely what provides protection against care fees, divorce, and bankruptcy. Can last up to 125 years.
• Interest in Possession Trusts: An income beneficiary (known as the life tenant) receives income or the use of trust property (such as the right to live in a house) during their lifetime, while the capital passes to a different beneficiary (the remainderman) afterwards. Commonly used in will trusts to protect against sideways disinheritance — for example, ensuring a surviving spouse can live in the family home while guaranteeing it ultimately passes to the children. Post-March 2006 interest in possession trusts are generally treated under the relevant property regime for IHT purposes unless they qualify as an Immediate Post-Death Interest (IPDI) or disabled person’s interest.
• Bare Trusts: The beneficiary has an absolute right to the capital and income once they reach age 18 (16 in Scotland). The trustee is merely a nominee with no real discretion. Bare trusts offer no protection against care fees, divorce, or creditors, and are not IHT-efficient. Once the beneficiary reaches majority, they can collapse the trust entirely under the principle established in Saunders v Vautier.
• Charitable Trusts: Established for charitable purposes and subject to specific rules under charity law. They offer significant tax advantages, including IHT relief.

Each type of trust serves different purposes, and choosing the right one depends on your specific family circumstances and objectives. For most families, a discretionary trust provides the broadest protection.

Importance of Trusts in Estate Planning

Trusts play a vital role in estate planning by allowing you to manage how your assets are protected and distributed after you pass away. They can help reduce inheritance tax liabilities (IHT is charged at 40% on estates above the nil rate band of £325,000), protect assets from local authority care fee assessments (where residential care alone can cost £1,100-£1,300 per week), prevent sideways disinheritance, and shield family wealth from a beneficiary’s divorce — with the UK divorce rate currently around 42%, this is a very real concern.

Critically, trust assets bypass the probate process entirely. While probate in England and Wales can take 3-12 months (and longer when property sales are involved), trustees can act immediately upon the settlor’s death. During probate, all sole-name assets are frozen — bank accounts, property, investments. Trust assets remain accessible.

By incorporating trusts into your estate plan, you can achieve greater peace of mind, knowing that your assets will be managed and distributed as you intended — and protected from threats you may not have even considered.

The Role of the Trustee

Trustees play a vital role in managing trusts, and understanding their responsibilities is key to effective trust management. When you establish a trust, you need to appoint trustees who will oversee its administration and ensure that your wishes are carried out — both during your lifetime and after your death.

Duties and Responsibilities Explained

A trustee’s duties are multifaceted and include managing trust assets, making distributions to beneficiaries (in a discretionary trust, this is entirely at the trustees’ discretion), and ensuring compliance with the trust deed and relevant UK legislation including the Trustee Act 2000.

The key responsibilities of a trustee include:

• Managing trust assets prudently, acting as a reasonable and careful trustee would
• Making informed investment decisions (the Trustee Act 2000 imposes a statutory duty of care)
• Distributing income and capital to beneficiaries according to the trust deed
• Maintaining accurate records and accounts of all trust transactions
• Filing the annual trust tax return (SA900) with HMRC and paying any tax due
• Registering the trust on the Trust Registration Service (TRS) within 90 days of creation
• Acting impartially between beneficiaries — no favouritism

Types of Trustees in the UK

In the UK, you can appoint different types of trustees. A minimum of two trustees is required (and up to four can be registered on a property title at the Land Registry). The choice depends on your specific needs and the complexity of the trust.

How to Choose a Trustee Wisely

Choosing the right trustee is one of the most important decisions in setting up a trust. The trustees will have legal control of the assets, so you need people you genuinely trust and who are capable of carrying out the role responsibly.

When selecting trustees, you should consider:

• Their integrity and trustworthiness — this is the single most important factor
• Their understanding of your family’s needs and dynamics
• Their availability and willingness to take on the responsibilities for what could be decades
• The potential for conflicts of interest — a trustee who is also a beneficiary may face difficult decisions
• Whether the trust deed includes a clear process for removing and replacing trustees if circumstances change

It’s also worth noting that the settlor can be a trustee — which is how Mike Pugh’s family trusts typically work. This means you remain involved in decisions about your own assets during your lifetime. The trust deed should also include clear provisions for what happens when a trustee can no longer serve, ensuring a smooth transition.

Impact of Your Will on Trusts

When it comes to estate planning, the interplay between wills and trusts is something many people misunderstand. In the UK, understanding how these two elements work together — and where they differ — is crucial for ensuring your assets end up where you want them.

How Wills and Trusts Work Together

Wills and trusts are both essential tools in estate planning, but they serve fundamentally different purposes. A will outlines how you want your probate estate to be distributed after your death. A trust is a separate legal arrangement that can operate both during your lifetime and after your death, with trustees managing assets for beneficiaries.

Together, they can provide a comprehensive estate plan. For instance, your will can direct that certain assets be transferred into a trust upon your death (creating a “will trust”), while a lifetime trust you set up before death operates independently of the will altogether. Assets already held in a lifetime trust do not form part of your probate estate — they are already owned by the trustees.

This is a critical distinction: assets in a lifetime trust bypass the entire probate process. The will only governs assets in your sole name at the date of death.

The Role of Executors vs. Trustees

It’s essential to understand the distinct roles of executors and trustees — they are not the same thing, even though the same person can hold both roles.

An executor is appointed under your will. Their job is to apply for the Grant of Probate, collect in your probate estate assets, pay any debts and inheritance tax, and then distribute what’s left to the beneficiaries named in the will. Once the estate is fully administered, the executor’s role is finished.

A trustee is appointed under the trust deed. Their role is ongoing — potentially for decades or even the full 125-year maximum duration of the trust. They manage and protect the trust assets for the beneficiaries according to the terms of the trust deed.

The key point: executors deal with probate assets; trustees deal with trust assets. If you’ve placed your home into a lifetime trust, the executor has no authority over it — the trustees do.

What Happens Without a Will?

Dying without a will (intestate) can lead to significant complications. The distribution of your probate estate will be governed by the rules of intestacy, which follow a rigid formula that may not align with your wishes at all.

• Under intestacy, unmarried partners receive nothing — regardless of how long you’ve been together.
• Assets are distributed according to a fixed hierarchy: spouse first, then children, then parents, then siblings — with no flexibility.
• Beneficiaries may face unnecessary delays and additional legal challenges, including potential disputes.
• Inheritance tax planning opportunities are likely to be missed entirely.

However, it’s important to note that if you’ve already placed assets into a lifetime trust, those assets are not affected by intestacy — they are governed by the trust deed, not the rules of intestacy. This is one of the many reasons why a lifetime trust provides an additional layer of certainty beyond a will alone.

Having a valid will, coupled with appropriately structured trusts, helps ensure that your estate is managed according to your intentions and that no family member is left unprotected.

Control of Trust Assets After Death

Understanding who controls trust assets after your death is crucial for effective estate planning in the UK. When a settlor passes away, the management of trust assets continues with the surviving trustees. If the settlor was also a trustee (which is common), the remaining trustees continue to manage the trust. If the trust deed names replacement trustees, they step in according to the trust’s provisions.

Understanding Successor Trustees

Successor trustees are individuals named in the trust deed who are appointed to take over the management of a trust when an existing trustee can no longer serve — whether due to death, loss of mental capacity, or resignation. Their role is to continue administering the trust according to its terms and for the benefit of the beneficiaries.

This is one of the key advantages of a trust over a will: there is no waiting for probate. Successor trustees can step in and act immediately. There is no need to apply to the Probate Registry, no asset freezing, and no months-long delay. The trust simply continues operating.

To ensure a smooth transition, it’s essential to choose successor trustees wisely and to make sure they know where the trust deed is kept and understand their responsibilities. You can find more information about managing trusts and the process of locating trust deeds.

When Trusteeship Transfers

The transfer of trusteeship is governed by the trust deed. A well-drafted trust deed will set out a clear procedure for appointing new trustees, which typically includes:

• The power of the existing trustees (or a named appointor) to appoint replacement trustees
• A mechanism for beneficiaries to be consulted or to nominate new trustees where appropriate
• As a last resort, an application to the court for judicial appointment of new trustees

It’s crucial to review the trust deed periodically to ensure the trustee appointment provisions still reflect your wishes and that named successor trustees are still willing and able to serve. Life changes — people move abroad, relationships shift, health deteriorates — so keeping these provisions up to date is essential.

Limitations on Trustee Authority

While trustees have significant powers to manage trust assets, their authority is not unlimited. Trustees are fiduciaries, meaning they must act in the best interests of the beneficiaries and strictly in accordance with the trust deed and relevant UK legislation.

Some key limitations include:

• Duty to act impartially among beneficiaries — they cannot favour one over another without good reason
• Prohibition on self-dealing — trustees cannot use trust assets for personal gain or benefit
• Requirement to keep accurate records and provide information to beneficiaries upon reasonable request
• Obligation to comply with the terms of the trust deed and applicable UK law, including the Trustee Act 2000
• Duty to invest prudently — the statutory duty of care requires trustees to consider the suitability and diversification of investments
• A letter of wishes — while not legally binding, this document from the settlor provides guidance to trustees on how they would like the trust to be administered, and trustees are expected to give it serious consideration

Understanding these limitations is vital for both trustees and beneficiaries. If a trustee oversteps their authority, beneficiaries have legal recourse — including the ability to apply to the court to have the trustee removed and replaced.

Legal Framework Governing Trusts

Understanding the legal framework that governs trusts is crucial for effective estate planning in the UK. The legal landscape surrounding trusts involves several important statutes and a rich body of case law that dictate how trusts are established, managed, and terminated.

Key Legislation in the UK

The UK has a robust legal framework for trusts, primarily governed by several key pieces of legislation. The Trustee Act 2000 is pivotal, as it outlines the duties and powers of trustees, including the statutory duty of care and their obligations regarding investment. The Inheritance Tax Act 1984 determines the tax treatment of trusts, including the relevant property regime that applies to discretionary trusts — covering entry charges, 10-year periodic charges (maximum 6% of trust property above the nil rate band), and exit charges.

Other relevant legislation includes the Trusts of Land and Appointment of Trustees Act 1996, which governs how trusts involving land are managed and how trustees are appointed and removed, and the Perpetuities and Accumulations Act 2009, which sets the maximum trust duration at 125 years for trusts created after its commencement. The registration requirements for trusts under the Money Laundering Regulations (implementing the 5th Money Laundering Directive) mean that all UK express trusts must now be registered on the Trust Registration Service (TRS) — though importantly, the TRS register is not publicly accessible, unlike Companies House.

How Trust Law Impacts Beneficiaries

Trust law significantly impacts beneficiaries by defining their rights and entitlements — and these vary dramatically depending on the type of trust. In a bare trust, the beneficiary has an absolute right to the assets and can demand them at age 18. In a discretionary trust, beneficiaries have no fixed entitlement whatsoever — they are merely potential recipients, and it is entirely up to the trustees to decide who gets what, when, and how much. This lack of entitlement is precisely what protects the assets.

Beneficiaries do have the right to certain information about the trust, though the extent of this right depends on the type of trust and the circumstances. For those looking to understand how to access a trust fund, visiting this guide on accessing a trust fund in the UK can provide valuable insights.

Beneficiaries also have the right to challenge trustee decisions if they believe the trustees are acting outside their powers, in breach of their fiduciary duties, or not in accordance with the trust deed. This legal recourse ensures that trustees are held accountable.

Relevant Case Law Insights

Case law has played a crucial role in shaping trust law in the UK over centuries. Landmark cases have established important precedents regarding trustee duties, the distinction between legal and beneficial ownership, beneficiary rights, and the interpretation of trust deeds. For instance, the principle from Saunders v Vautier established that beneficiaries of a bare trust who are of full age and capacity can collapse the trust and demand the assets. Cases involving breaches of trust have clarified the personal liability trustees face if they fail to act in accordance with their obligations — including the potential requirement to compensate the trust from their own resources.

Understanding these legal precedents is vital for both trustees and beneficiaries to appreciate the responsibilities involved and to ensure compliance with legal requirements.

Rights of Beneficiaries

When establishing a trust, it’s essential to consider the rights and entitlements of its beneficiaries — and to understand that these rights vary significantly depending on the type of trust. In a discretionary trust, beneficiaries have far fewer fixed rights than in a bare trust, and this distinction matters enormously for asset protection.

Understanding Beneficiary Entitlements

The entitlements of beneficiaries depend on the type of trust:

• Discretionary trust beneficiaries have no automatic right to receive anything. They can only receive distributions at the trustees’ discretion. They may request information about the trust, but even this right is more limited than many people assume — trustees are not always obliged to share full details of their reasoning.
• Bare trust beneficiaries have an absolute right to the capital and income at age 18 and can demand the trust assets be handed over.
• Interest in possession beneficiaries (life tenants) have a right to the income or use of the trust property during their lifetime, but not the capital.
• All beneficiaries have the right to enforce the trust — meaning they can take legal action if trustees act outside their powers or in breach of duty.

Beneficiaries should understand their specific entitlements under the trust deed to ensure their interests are properly protected.

Can Beneficiaries Influence Trustee Decisions?

The extent to which beneficiaries can influence trustee decisions depends heavily on the type of trust and its terms:

• In a discretionary trust, beneficiaries generally cannot direct the trustees. The whole point is that the trustees exercise independent discretion. However, the settlor’s letter of wishes — a non-binding document — provides guidance to trustees about the settlor’s intentions.
• Beneficiaries can make their needs and circumstances known to the trustees, who should take this into account when exercising discretion.
• If beneficiaries believe trustees are acting improperly, they can seek court intervention — but disagreeing with a legitimate exercise of discretion is not the same as a breach of duty.

It’s worth noting that in some trusts, beneficiaries or other named individuals may have the power to appoint and remove trustees. This provides an indirect form of influence — if you can choose who the trustees are, you have considerable practical control over the trust’s direction.

What Happens if a Trustee Breaches Their Duty?

If a trustee breaches their fiduciary duty, beneficiaries have several legal options to address the situation:

Understanding these rights and remedies is crucial for beneficiaries. A well-drafted trust deed will include a clear process for removing and replacing trustees, reducing the need to involve the courts in most situations.

Tax Implications for Trusts

The tax landscape surrounding trusts in the UK is complex, but understanding the basics is essential for anyone involved in trust administration or estate planning. Trusts are subject to inheritance tax, income tax, and capital gains tax, and the rules differ depending on the type of trust.

Inheritance Tax Basics

Inheritance tax (IHT) is charged at 40% on the taxable estate above the nil rate band (NRB) of £325,000 per person — a threshold that has been frozen since 2009 and is confirmed frozen until at least April 2031. This freeze is the single biggest reason ordinary homeowning families are now being caught by IHT. A reduced rate of 36% applies if 10% or more of the net estate is left to charity. For married couples and civil partners, unused NRB can be transferred to the survivor, giving a combined maximum of £650,000. The Residence Nil Rate Band (RNRB) adds up to £175,000 per person (£350,000 for a couple) — but only where a qualifying residential interest passes to direct descendants such as children, grandchildren, or step-children. The RNRB is not available for gifts to nephews, nieces, siblings, friends, or charities, and it tapers by £1 for every £2 the estate exceeds £2,000,000.

For more detailed guidance on IHT and trusts, you can refer to our comprehensive guide on whether you pay inheritance tax on a trust.

The IHT treatment of a trust depends entirely on its type. Discretionary trusts fall within the relevant property regime, which means they are subject to:

• Entry charge: 20% on the value transferred above the available NRB. For most families putting their home into trust, if the value is within the NRB (£325,000, or effectively £650,000 for a couple using two trusts), the entry charge is zero.
• 10-year periodic charge: Maximum of 6% of the trust property value above the NRB. For most family homes below the NRB, this charge is again zero.
• Exit charge: Proportional to the last periodic charge. If the periodic charge was nil, the exit charge will also be zero.

Bare trusts are treated differently — the assets are treated as belonging to the beneficiary for IHT purposes, offering no IHT planning benefit. Interest in possession trusts created after March 2006 are generally subject to the relevant property regime unless they qualify as an Immediate Post-Death Interest (IPDI) or disabled person’s interest.

Income Tax and Trusts

Trusts are subject to income tax on income they generate, such as rental income, dividends, or interest. The rates for discretionary trusts are:

• 45% on non-dividend income (the trust rate)
• 39.35% on dividend income
• The first £1,000 of trust income is taxed at the basic rate

Bare trusts are transparent for income tax purposes — the income is taxed as the beneficiary’s own income at their personal rate. Interest in possession trusts similarly attribute income to the life tenant.

Trustees must file an SA900 trust tax return with HMRC and pay any tax due. Beneficiaries receiving distributions may receive a tax credit for tax already paid by the trustees.

Capital Gains Tax Considerations

Capital gains tax (CGT) is another important consideration for trusts. When trustees dispose of trust assets, they may be liable for CGT on any gains realised. Current CGT rates for trusts are 24% for residential property and 20% for other assets. Trusts receive an annual exempt amount of half the individual level (currently £1,500).

An important point for family home trusts: transferring your main residence into a trust normally does not trigger a CGT charge, because Principal Private Residence Relief (PPR) applies at the point of transfer. Additionally, holdover relief may be available when assets are transferred into or out of certain trusts, deferring any gain so there is no immediate CGT liability.

The tax implications for trusts are certainly complex, but they are manageable with proper professional advice. For most family homes going into a discretionary trust within the nil rate band, the ongoing tax charges are minimal — often zero. Trustees and beneficiaries must be aware of their obligations, but the potential tax costs should be weighed against the very real benefits of asset protection.

Trust Management After Death

Managing a trust after the settlor’s death involves several ongoing responsibilities for trustees. This is where the real value of a trust becomes apparent — while the family of someone who relied solely on a will may be waiting months for probate, trust assets can be managed and distributed immediately.

Ongoing Responsibilities of Trustees

After the settlor’s death, trustees have a continuing fiduciary duty to manage the trust assets prudently. Their responsibilities include:

• Investing trust assets wisely and reviewing investments regularly, in line with the statutory duty of care.
• Managing distributions to beneficiaries according to the trust deed — in a discretionary trust, this requires the trustees to actively consider the needs and circumstances of each beneficiary.
• Maintaining accurate records of all trust transactions and decisions.
• Filing annual trust tax returns (SA900) with HMRC and paying any taxes due.
• Keeping the Trust Registration Service (TRS) records up to date.
• Reviewing the trust’s position at each 10-year anniversary for IHT periodic charge purposes.

For more detailed information on how trusts work in the UK, you can visit our guide on how trusts work to protect your family’s future.

Periodic Reporting to Beneficiaries

Trustees should keep beneficiaries reasonably informed about the trust’s administration. While the level of information trustees are legally required to share varies (and in discretionary trusts, trustees are not always obliged to reveal their reasons for decisions), good practice includes providing periodic accounts and updates on the trust’s financial position.

Effective communication helps build confidence between trustees and beneficiaries, reducing the likelihood of disputes. Trustees should be transparent where appropriate and provide clear, concise information. Many settlors also leave a letter of wishes — a non-binding document that explains the settlor’s intentions and hopes for how the trust should be administered. This can be invaluable in guiding trustees after the settlor’s death.

Conflict Resolution Among Beneficiaries

Conflicts can arise among beneficiaries due to differing interpretations of the trust deed, disagreements over distributions, or simply family tensions. Trustees must act impartially and make decisions that are in the best interests of the beneficiaries as a whole — not just the most vocal one.

In cases where conflicts cannot be resolved through discussion, mediation is often a sensible first step before considering legal action. Trustees should seek professional legal advice promptly if a dispute escalates. A well-drafted trust deed that includes clear provisions — and a detailed letter of wishes from the settlor — can go a long way towards preventing disputes in the first place.

Trusts vs. Other Estate Planning Tools

Trusts are a vital component of estate planning, but how do they compare to other tools like wills? Understanding the differences is essential for making informed decisions about protecting your family and your assets.

Comparing Trusts and Wills

A will is a legal document that outlines how you want your probate estate to be distributed after your death. A trust is a legal arrangement where trustees hold and manage assets for the benefit of beneficiaries — potentially for up to 125 years.

The critical difference is what happens at death. A will must go through probate — a process that typically takes 3-12 months in England and Wales (and often 9-18 months when property needs to be sold). During this time, all sole-name assets are frozen. Your family cannot access bank accounts, sell property, or distribute anything until the Grant of Probate is issued. Assets held in a lifetime trust, by contrast, bypass probate entirely. Trustees can act immediately.

There’s also the question of privacy. Once a Grant of Probate is issued, your will becomes a public document — anyone can obtain a copy for a small fee. Trust deeds remain private. There is no public register of trust contents (the TRS register is accessible only to HMRC and certain authorities, not the general public).

Advantages of a Trust Over a Will

A trust offers several important advantages that a will simply cannot provide:

• Bypassing probate delays — trustees can act immediately, with no asset freezing and no waiting for the Probate Registry
• Privacy — trust deeds are not public documents, unlike wills after probate
• Protection from care fees — assets in a properly structured discretionary trust are not automatically counted in a local authority financial assessment, provided the trust was set up years before any foreseeable need for care
• Divorce protection — in a discretionary trust, no beneficiary “owns” the assets. As Mike Pugh puts it: “What house? I don’t own a house.” This makes it extremely difficult for an ex-spouse to claim trust assets in a divorce settlement
• Protection from sideways disinheritance — ensuring assets pass to your children even if a surviving spouse remarries
• Inheritance tax planning — depending on the trust structure, assets may be removed from the taxable estate
• Control over distribution — you can specify conditions, stagger distributions, and protect vulnerable or spendthrift beneficiaries

Common Misconceptions about Trusts

Many people believe that trusts are only for the wealthy. This is simply not true. With the average home in England now worth around £290,000, and the IHT nil rate band frozen at £325,000 since 2009, ordinary homeowning families are increasingly caught by inheritance tax — and are exposed to care fee risk. As Mike Pugh often says: “Trusts are not just for the rich — they’re for the smart.”

Another common misconception is that trusts are prohibitively expensive to set up. In reality, a straightforward family trust typically costs from £850, with most falling in the range of £850-£2,000 depending on complexity. When you compare that to average care home costs of £1,200-£1,500 per week, a trust costs the equivalent of roughly one to two weeks of residential care — but it’s a one-time fee that can protect your family for up to 125 years.

To clarify the key differences:

Both trusts and wills are important — they serve different purposes and work best when used together as part of a comprehensive estate plan.

Revoking or Amending a Trust

Trusts are not necessarily permanent — they can be amended or, in some cases, revoked. However, it’s important to understand the distinction between revocable and irrevocable trusts, and to appreciate the consequences of making changes.

Process for Making Changes

The process for amending a trust depends on its terms and whether it is revocable or irrevocable. Most trusts used for asset protection and IHT planning are irrevocable — meaning the settlor cannot simply take the assets back. However, “irrevocable” does not mean “inflexible.” Mike Pugh’s family trusts are drafted with “Standard and Overriding Powers” — carefully defined powers that give trustees flexibility to adapt to changing circumstances without making the trust revocable.

For trusts that permit amendment, the process typically involves drafting a deed of variation or deed of amendment that outlines the changes. This document must be executed correctly under English law — usually requiring execution by the trustees. The trust deed itself will specify what changes are permissible and who has the authority to make them.

It is critical to take professional legal advice before amending any trust, as poorly executed changes can have unintended IHT, CGT, or income tax consequences.

Who Can Change the Trust?

The ability to amend or revoke a trust depends on the type of trust and its specific terms. In a revocable trust, the settlor retains the power to make changes or revoke the trust entirely — but this means the assets are treated as still belonging to the settlor for IHT purposes (a “settlor-interested” trust), which defeats the purpose of most asset protection and inheritance tax planning.

In an irrevocable trust, the position is different. Typically:

• The trustees may exercise certain powers set out in the trust deed (such as advancing capital to beneficiaries, adding or removing beneficiaries from the class, or appointing new trustees)
• An appointor (often a family member named in the trust deed) may have the power to appoint and remove trustees
• In exceptional circumstances, the court may approve variations

The settlor of an irrevocable trust typically has no power to change the trust — and this is deliberate, because it’s what removes the assets from their estate for IHT purposes and protects them from care fee assessment.

Consequences of Revocation

Revoking a trust — where this is even possible — can have significant legal and tax consequences:

Understanding the process and implications of revoking or amending a trust is vital for effective trust administration in the UK. As Mike Pugh advises: “Plan, don’t panic.” Make changes deliberately and with proper professional guidance — not in haste.

Common Trust Scenarios in the UK

The use of trusts in the UK is diverse, catering to various family situations and objectives. Here are some of the most common scenarios where trusts prove invaluable.

Trusts for Minor Children

One of the most important uses of trusts is providing for minor children. Without a trust, any inheritance a child receives before age 18 must be managed by a court-appointed deputy or held by the personal representatives — a cumbersome and inflexible process. A discretionary trust solves this problem entirely.

• Protection of Assets: A discretionary trust safeguards assets on behalf of children, ensuring they are not accessible until the trustees decide the child is ready — which could be well beyond age 18. This prevents a potentially immature 18-year-old from receiving a large lump sum outright.
• Flexibility: Trustees can make distributions for education, housing deposits, or living costs at different stages of the child’s life, adapting to their actual needs rather than following a rigid formula.
• Protection from Future Risks: If a child later faces divorce, bankruptcy, or addiction issues, trust assets remain protected because the child has no legal ownership of them.

For instance, parents might establish a trust to cover educational expenses or housing costs for their children, with the trustees having discretion to release funds as appropriate. This ensures the children are financially supported according to the parents’ wishes — without handing them a large sum they may not be equipped to manage.

Charitable Trusts Explained

Charitable trusts are established to benefit charitable purposes and are subject to specific rules under charity law. They offer substantial tax advantages — most notably, leaving 10% or more of your net estate to charity can reduce the IHT rate from 40% to 36% on the remainder of the taxable estate.

Charitable trusts can be used to:

1. Support specific charitable causes, either during your lifetime or after death.
2. Reduce inheritance tax liabilities — both through the reduced rate and because charitable gifts are exempt from IHT entirely.
3. Create a lasting philanthropic legacy for your family.

For more information on how trusts function after a death, you can visit this guide on what happens to trusts in wills following a death.

Business Succession Planning

Business succession planning is a critical area where trusts play a vital role. Business owners use trusts to ensure the smooth transition of their business to the next generation or other designated successors — while potentially benefiting from Business Property Relief (BPR) for IHT purposes.

The benefits of using trusts in business succession planning include:

• Control and Continuity: A trust can hold business shares, ensuring continuity of ownership and management without the disruption of probate or the risk of shares being distributed to unsuitable inheritors.
• Tax Planning: Business Property Relief can provide up to 100% relief from IHT on qualifying business assets. However, from April 2026, BPR and Agricultural Property Relief (APR) will be capped at 100% for the first £1 million of combined business and agricultural property, with 50% relief on the excess.
• Protection: Trusts can protect business assets from potential disputes, divorce claims against family shareholders, or mismanagement by inexperienced successors.

By utilising trusts for business succession, business owners can ensure that their legacy continues uninterrupted while providing for their family — and keeping the business wealth within the family for generations.

Planning for the Future

Effective estate planning is not a one-time event — it’s an ongoing process that should be reviewed as your circumstances change. As Mike Pugh puts it: “Not losing the family money provides the greatest peace of mind above all else.”

Effective Estate Planning Strategies

To prepare your estate plan effectively, consider the key threats to your family’s wealth: inheritance tax (40% above the nil rate band), care fees (averaging £1,200-£1,500 per week, with between 40,000 and 70,000 homes sold annually to fund care in the UK), sideways disinheritance, divorce (around 42% of UK marriages end in divorce), and the delays and public nature of probate.

A comprehensive estate plan typically includes a properly drafted will, one or more lifetime trusts (such as a Family Home Protection Trust or Gifted Property Trust), Lasting Powers of Attorney for both financial decisions and health and welfare, and potentially a life insurance trust to prevent a 40% IHT charge on any payout. Working with a specialist — not a generalist — is essential. As Mike often says: “The law — like medicine — is broad. You wouldn’t want your GP doing surgery.”

Reviewing and Updating Your Trust

Trust administration requires ongoing attention. You should review your trust arrangements regularly — particularly after major life events such as marriage, divorce, the birth of grandchildren, a change in health, or a significant change in property values. The nil rate band has been frozen since 2009, meaning more and more families are being caught by IHT each year. What was a sensible plan five years ago may need updating today.

Ensure that your named trustees and successor trustees are still appropriate, that the letter of wishes is up to date, and that the trust registration on the TRS is current.

Communicating with Beneficiaries

Clear communication with your family about your estate plan — while you’re still alive to explain your reasoning — is invaluable. Many trust disputes arise not from legal issues but from misunderstandings or unmet expectations.

Consider explaining to your family why you’ve set up the trust, what it’s designed to protect against, and how it will work after your death. A detailed letter of wishes left with the trust deed can guide your trustees on your intentions and help prevent family conflict.

By taking these steps and working with experienced professionals, you can create a robust estate plan that protects your assets and provides for your loved ones — keeping your family wealth intact for generations to come. Because as Mike says: “Keeping families wealthy strengthens the country as a whole.”