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Protecting Your Assets and Your Beneficiaries
31 March, 2026 5 minutes reading time
When you consider the future, it is natural to want the people you love to be safe and well cared for. Estate planning goes beyond simply having a Will. It is about two equally important things; protecting your assets from outside risks and protecting your beneficiaries from challenges they may not be ready to handle.
Trusts are a wonderful and effective way to achieve this peace of mind. They ensure your hard-earned assets reach the right hands at exactly the right moment.
Why Use a Trust?
A trust is a helpful legal arrangement in which you hand over assets to trusted individuals (trustees) to manage on behalf of others (beneficiaries). Many families choose to use trusts to:
- Protect young children who aren’t quite ready to manage an inheritance.
- Support vulnerable family members without affecting their benefits.
- Guide how and when money is used, like for education or housing.
- Safeguard assets from risks such as divorce, other challenges, or bankruptcy.
Common Types of Trusts
There isn’t a one-size-fits-all “standard” trust; the best choice really depends on your family’s unique circumstances.
Revocable and Irrevocable Trusts
A revocable trust is flexible, allowing you to change or revoke it during your lifetime, which can be quite convenient. On the other hand, an irrevocable trust is more permanent and offers less flexibility, but can come with better tax benefits and stronger protection from creditors.
Living Trusts and Will Trusts
A living trust is created while you’re still alive, helping you manage assets smoothly and avoid a lengthy probate process later on. A Will trust, however, is incorporated into your Will and only takes effect after you pass away.
Trusts with Specific Purposes
- Bare Trusts are straightforward. They immediately transfer assets to the beneficiary, though trustees often hold them until the beneficiary reaches age 18 (or 16 in Scotland). While they are frequently used for children, a Bare Trust can be set up for an adult at any time.
- Discretionary Trusts grant trustees significant authority. They decide how much money to distribute and to whom, which is very helpful if your family’s needs might change over time.
- An Interest in Possession Trust allows a beneficiary to receive income from the trust for their lifetime, while the capital eventually goes to another person.
- Trusts for Vulnerable People are designed to support individuals with disabilities, often offering tax advantages to ensure more funds go directly toward their care.
- Protective Trusts are a safeguard, helping beneficiaries who might otherwise overspend or be vulnerable to debts.
- Charitable Trusts enable you to leave a meaningful legacy for causes close to your heart, with the added benefit of potential tax reductions.
Mixed Trusts
Sometimes, blending different trust types makes the most sense. For example, some assets might be held in a Bare Trust for a child, while others are managed in a Discretionary Trust for the broader family.
Common Trusts Comparison
Here’s a brief overview of the most common trust structures. It shows who is in control, who receives the money, and why you might prefer one over another.
| Trust Type | Who Controls The Assets | Who Benefits | Best Used For |
|---|---|---|---|
| Bare Trust | Trustees hold the assets until the beneficiary is 18 (16 in Scotland). | One specific person who has an absolute right to all capital and income. | Simple gifts to children/grandchildren or straightforward asset management for adults. |
| Discretionary Trust | Trustees have full power to decide who gets what and when. | A group or "class" of people (e.g., "all my grandchildren"). | Protecting assets from a beneficiary’s divorce, debt, or poor spending habits. |
| Interest in Possession Trust | Trustees manage the assets but must pay out all income. | An "Income Beneficiary" gets the profit/rent for life; "Capital Beneficiaries" get the rest later. | Providing for a spouse while ensuring the family home eventually goes to children. |
| Vulnerable Beneficiary Trust | Trustees manage the funds specifically for a person with a disability. | A disabled person or a bereaved minor. | Maximising tax breaks and protecting a vulnerable person's eligibility for state benefits. |
| Charitable Trust | Trustees manage the assets for a specific cause. | Registered charities or specific charitable purposes. | Leaving a lasting legacy and reducing your estate's Inheritance Tax bill. |
Registering a Trust
To help keep things transparent, the UK government requires most trusts to be registered with HMRC’s Trust Registration Service (TRS). This is a standard requirement under anti-money laundering rules.
Even if your trust doesn’t owe any tax, you will likely still need to register it. Generally, you must register a UK “express trust” (one specifically created by a person) if:
- It was set up on or after 6 October 2020.
- It has become liable for any UK tax.
In most cases, you have 90 days from the date the trust is created to complete this registration. It is an important step to ensure your trust remains compliant and legal, so it’s always best to check if this applies to you early on.
A Note on Timing and “Deprivation of Assets”
While trusts are excellent for protection, it is important to set them up for the right reasons and at the right time. Some people consider moving assets into a trust specifically to avoid future care home fees. However, if a local authority decides that the main reason for a trust was to bypass these costs, they may view it as a ‘deliberate deprivation of assets.’
In these cases, the assets might still be counted as yours when calculating care costs. This is why we always recommend planning early. Setting up a trust long before any need for care arises ensures your arrangements are robust, clear, and compliant with the law.
Our Advice
While trusts are a valuable tool for protection, they aren’t a one-size-fits-all solution. Getting expert advice is crucial. It helps ensure the trust is tailored to your unique circumstances. It’s important to feel confident in understanding the legal, tax, and administrative implications before you proceed.
If you’re concerned about how your beneficiaries might manage an inheritance, rest assured, you’re not alone. Trusts offer a variety of options to safeguard your loved ones while honouring your wishes responsibly.
Please don’t hesitate to contact us for advice or information. We’re here to help.
Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.
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