Trusts in wills: types, tax and trustees

What is a trust in a will?

A trust is a way of managing assets for people. GOV.UK's Trusts and taxes guide describes three roles: the settlor who puts assets in (for a will trust, that is you), the trustees who become the legal owners and manage the assets, and the beneficiaries who benefit. A "will trust" is simply a trust your will creates when you die. There must always be at least one trustee. A will can appoint the same people as executors and trustees, and SwiftWill's does.

People use will trusts to look after money for children, to provide for a partner while protecting children's inheritance, to give trustees flexibility, and to support someone who cannot manage money. A gift made "absolutely" to an adult is not a trust: the beneficiary simply owns it once the estate is administered.

What types of trust can a will create?

GOV.UK lists bare, interest in possession, discretionary, accumulation, mixed, settlor-interested and non-resident trusts. The ones that matter in most wills are below.

How do trusts for children work?

Any gift to a child under 18 has to be held by trustees, because a child cannot give a valid receipt, and section 1(6) of the Law of Property Act 1925 says a legal estate in land cannot be held by a minor. The question is what terms the trustees hold it on.

• Absolute gift, held until 18. This works like a bare trust: GOV.UK says a bare trust beneficiary has the right to all the capital and income at 18 in England and Wales. Until then, the Trustee Act 1925 gives trustees power to use income for the child's maintenance, education or benefit (section 31) and to advance capital for their benefit (section 32).
• Bereaved minor trust. HMRC's trusts and inheritance tax guidance says a trust for a person under 18 who has lost a parent or step-parent has no inheritance tax charges if the assets are set aside just for that child and they become fully entitled by 18.
• 18-to-25 trust. The child must become fully entitled by 25. The 10-yearly charges do not apply, but exit charges may apply while the beneficiary is aged 18 to 25. HMRC's Trust Registration Service manual says these trusts can only be set up by the will of a deceased parent (or under two compensation schemes).

Choosing an age later than 18 is not just wording. HMRC's Capital Gains Manual (CG34430) summarises the long-standing rule in Saunders v Vautier: a beneficiary with an absolute, vested interest can usually require trustees to hand over the property once they are an adult, even if the will postpones payment. Whether that applies depends on how the whole will is drafted, including what happens if the beneficiary dies before the chosen age. It also affects tax: HMRC's residence nil-rate band guidance says that if beneficiaries must reach a certain age before they inherit a home, the home is held in trust and the band does not apply. HMRC's trusts guidance adds that an estate may still qualify where the trust is for, for example, orphaned children under 18 or children under 25. See writing a will with children for guardians and choosing an age.

What does SwiftWill's will do for children and younger beneficiaries?

SwiftWill's will makes gifts outright and uses one age-based trust clause. If you have children or leave part of your residue to a child, the interview asks what age younger beneficiaries should inherit: 18, 21 or 25.

• The executors are appointed as "executors and trustees", so the same people manage any share held for a young beneficiary.
• If you choose 21 or 25, the will adds a clause saying that a beneficiary who has not reached that age at your death becomes entitled only if they reach it, that your trustees hold the gift or share on trust until then, and that the trustees may use the income and capital for that beneficiary's maintenance, education and benefit in the meantime. The clause applies despite the word "absolutely" in the gifts, so the beneficiary cannot call for the share at 18.
• If you choose 18, there is no separate age clause. A child's share is held until they are 18, and the will's administrative powers let the trustees make payments for a minor's benefit and accept a receipt from a parent or guardian.
• If a beneficiary survives you but dies before the chosen age, their gift or share passes as if they had died before you: to the substitute or children named in the will, or to the other residuary beneficiaries. For your own children a trust to 21 or 25 follows the pattern of HMRC's 18-to-25 trusts; for grandchildren it does not, so a home held for them this way loses the residence nil-rate band. Ask a solicitor if that matters to your estate.

That can suit a family leaving modest sums to their own children. If you want the money to go elsewhere should a child die young, want to be sure an adult child cannot call for it before the chosen age, or want a particular tax treatment, a solicitor should draft the trust. Our annotated sample will shows the executor, trustee and administrative clauses in context.

What is a life interest trust?

A life interest trust gives one person the benefit of assets for their lifetime and keeps the capital for others after that. GOV.UK's example is shares left on trust so that a wife receives the income for life and the shares then pass to the children; she has an "interest in possession" but no right to the shares themselves.

With a home, the life tenant usually has the right to live there. Under section 12 of the Trusts of Land and Appointment of Trustees Act 1996, a beneficiary with an interest in possession in land is entitled to occupy it if the trust's purposes include that, and trustees can set reasonable conditions such as paying outgoings (section 13).

The main reason people use one is to avoid "sideways disinheritance". If you leave everything outright to a spouse, they can later make a new will, remarry or spend it, and your children from an earlier relationship may inherit nothing. A life interest keeps the capital for the people you choose. Our second marriage with children guide covers this in more detail.

For inheritance tax, a life interest created by a will is usually an "immediate post-death interest". HMRC's manual (IHTM16061) treats the trust property as part of the life tenant's estate, and where the life tenant is your spouse or civil partner the spouse exemption covers the property on your death (IHTM11061). The trust property is then taxed as part of their estate when they die.

What is a property protection trust?

"Property protection trust" is a label, not a legal category. It usually means a life interest trust over your share of the family home: your partner can stay in the home for life, and your share then passes to the beneficiaries you chose, often your children. It only works if you own your share as a tenant in common, because a joint tenant's interest passes to the survivor automatically. See joint tenants vs tenants in common.

Be wary of any promise that such a trust will "protect the home from care fees". It can decide what happens to your own share after you die, but it does not affect how your own assets are assessed while you are alive, and councils can look at arrangements made to reduce care charges. Our guide to care home fees and your will sets out the rules.

What is a discretionary trust?

In a discretionary trust the trustees decide which beneficiaries receive income or capital, how much and when, within the terms of the trust. GOV.UK gives examples such as a grandchild who may need more help later, or beneficiaries who are not capable or responsible enough to manage money. A letter of wishes can guide the trustees without binding them.

The trade-off is tax and administration. Assets in most discretionary trusts are "relevant property": HMRC says the charge at each 10-year anniversary can be up to 6% (IHTM42081), and exit charges when assets leave the trust are also capped at 6%. HMRC also says a home put into a discretionary trust on death does not qualify for the residence nil-rate band, even if the beneficiaries are direct descendants, unless the trust meets conditions such as those for a disabled beneficiary or children under 25.

How do trusts for disabled or vulnerable people work?

GOV.UK defines a vulnerable beneficiary as someone under 18 whose parent has died, or a disabled person who is eligible for benefits such as Personal Independence Payment, Attendance Allowance or certain rates of Disability Living Allowance (even if they do not receive them), or someone unable to manage their affairs because of a mental health condition. See the GOV.UK trusts for vulnerable people guide.

• Trustees can elect for special income tax and capital gains tax treatment using the Vulnerable Person Election form (VPE1).
• For inheritance tax, a disabled person's trust set up on or after 8 April 2013 must pay everything to the disabled person, apart from up to £3,000 a year (or 3% of the assets if lower) that can be used for someone else. These trusts are exempt from the 10-yearly charges.
• For care charging in England, the statutory guidance does not treat capital held in a discretionary trust as capital the person can obtain on application (Annex B, paragraph 58).

Benefit rules, tax elections and the choice between a disabled person's trust and a discretionary trust interact. This is specialist drafting: GOV.UK lists leaving money or property to a dependant who cannot care for themselves as a reason to get legal advice.

What do trustees have to do?

Trustees hold legal title to the trust assets and must manage them for the beneficiaries, within the trust terms and the law. The main duties are:

1. Take reasonable care and skill, judged against any special knowledge they have or claim, and a higher standard for professionals (Trustee Act 2000, section 1).
2. Invest with regard to suitability and diversification, review investments from time to time, and take proper advice unless it is reasonably unnecessary (sections 3 to 5).
3. Where the trust holds land, consult adult beneficiaries entitled to an interest in possession and, so far as consistent with the trust, give effect to their wishes (Trusts of Land and Appointment of Trustees Act 1996, section 11).
4. Deal with tax: trust tax returns, any inheritance tax charges reported on form IHT100, and registration on HMRC's Trust Registration Service where required.
5. Keep enough trustees. Sale money from land held on trust must be paid to at least two trustees or a trust corporation, although a sole personal representative can give a valid receipt (Law of Property Act 1925, section 27(2), quoted in HM Land Registry Practice Guide 24). Appointing at least two executors and trustees avoids delay.

If you are choosing trustees, the people you name as executors usually take on this role. Our guide to what an executor does covers choosing them.

How are will trusts taxed?

This is a high-level summary. Trust taxation is complex, and rates and allowances change.

Sources: GOV.UK trusts and income tax, trusts and capital gains tax and trusts and inheritance tax. The inheritance tax thresholds are £325,000 plus, where a home goes to direct descendants, up to £175,000; our inheritance tax calculator gives a rough estimate.

When do you need a solicitor to draft a trust?

Use a solicitor for any trust other than a simple age-based gift to young beneficiaries. SwiftWill's suitability check asks whether you need any kind of trust in your will, whether you have children from a previous relationship you want to protect while providing for a partner, and whether you need to provide for a dependant who cannot care for themselves. Answering yes or not sure to any of these sends you to a solicitor before you pay. Typical cases:

• a second marriage or blended family where you want a life interest for your partner;
• a disabled or vulnerable beneficiary, or someone receiving means-tested support;
• an estate where inheritance tax planning, the residence nil-rate band or business assets matter;
• a wish to keep money from an adult child until a later age, or to add conditions;
• a home owned with someone you are not married to.

Our page on whether you need a solicitor lists what to ask for. If none of these apply and you want simple gifts, including an age of 21 or 25 for young beneficiaries, you can start a SwiftWill and preview it free before paying.

Sources

• GOV.UK: Trusts and taxes (types of trust, trusts for vulnerable people, income tax, capital gains tax, inheritance tax)
• HMRC: Trusts and Inheritance Tax
• HMRC IHTM16061 and IHTM11061 (immediate post-death interests, spouse exemption) and IHTM42081 (10-year charge)
• HMRC Trust Registration Service Manual TRSM23020
• HMRC Capital Gains Manual CG34430 (Saunders v Vautier)
• HMRC: Work out and apply the residence nil rate band
• Trustee Act 2000, sections 1 and 3 to 5; Trustee Act 1925, sections 31 and 32
• Trusts of Land and Appointment of Trustees Act 1996, sections 11 to 13
• Law of Property Act 1925, section 1(6); HM Land Registry Practice Guide 24
• Care and support statutory guidance, Annex B

Sources checked 24 September 2026.