Wills & Family
Who should I choose as executor if I don’t trust my family?
Not everyone has a relative they would trust to handle their estate. Here is how to think about other options, from friends to professional executors.
A trust in simple terms
A trust is a way of holding money, property or investments for someone else. The people who look after the assets are called trustees. The people who benefit are called beneficiaries. The trustees are the legal owners, but they must use the assets for the beneficiaries, not for themselves.
GOV.UK describes three main roles in a trust:
- The settlor – the person who puts assets into the trust and decides how they should be used.
- The trustee – the person who manages the trust and is the legal owner of the assets.
- The beneficiary – the person who benefits, which might mean receiving income, capital, or both.
One person can sometimes hold more than one role. For example, a settlor can also be a trustee. If you are asked to take on the trustee role, our guide on what being a trustee involves explains the duties.
Why do people use trusts?
People use trusts for many different reasons. Common ones include:
- holding money for children until they are older
- looking after assets for someone who may find it hard to manage money, such as a vulnerable or disabled relative
- giving a surviving partner the right to live in a home, while keeping the home itself for children later
- keeping some flexibility about who receives what, and when
- making sure life insurance pays out to the right people
A trust is a tool, not a goal in itself. Whether one is suitable depends on your family, your assets and what you want to happen. Many people never need one.
Lifetime trusts and Will trusts
Lifetime trusts
A lifetime trust is set up while the settlor is alive. Assets are moved into it, usually through a written document called a trust deed. Once assets are in the trust, they generally no longer belong to the settlor.
Will trusts
A Will trust is written into a Will and only comes into effect after death. For example, a Will might say that a share of the estate is held in trust for grandchildren until they reach 25. The executors often become the trustees, but they do not have to be the same people.
Common types of trust
GOV.UK lists several types of trust. Each has different rules, including different tax treatment.
| Type | In brief |
|---|---|
| Bare trust | Assets are held in a trustee’s name, but an adult beneficiary is entitled to the capital and income. |
| Interest in possession trust | A beneficiary is entitled to the income as it arises, but not the underlying assets. |
| Discretionary trust | The trustees decide who benefits, how much and when. |
| Accumulation trust | Trustees can add income to the trust capital rather than paying it out. |
| Mixed trust | A combination of more than one type. |
A practical example
Imagine a grandmother who wants to leave money to her two young grandchildren. Children under 18 cannot hold assets directly in the usual way. Her Will could leave the money to trustees, who invest it and use it for the children’s education or pass it to them at an age she chooses. The trustees must keep records and act in the children’s interests.
Trusts, tax and paperwork
Trusts can have their own tax rules for Income Tax, Capital Gains Tax and Inheritance Tax. Trustees may need to file tax returns. Many trusts must also be registered with HM Revenue and Customs (HMRC) on the Trust Registration Service, even some that pay no tax. Our guides on trust tax basics and registering a trust with HMRC cover these in more detail.
Scotland and Northern Ireland
Trusts exist across the UK, and HMRC’s tax and registration rules apply UK-wide. However, the general law of trusts in Scotland is different from England and Wales. WillHarbour currently focuses on England and Wales, so if you live in Scotland or Northern Ireland, local official guidance on mygov.scot or nidirect is a good starting point.
When to get professional help
Trusts can be hard to undo once they are set up. Tax consequences can arise on day one, and trustees take on legal duties. It is usually sensible to speak to a qualified professional, such as a solicitor or a member of STEP (the Society of Trust and Estate Practitioners), if:
- you are thinking about putting a home, business or large sum into a trust
- you want to provide for someone who is vulnerable or receives means-tested benefits
- you have a blended family and want to balance different people’s interests
- you have been named as a trustee and are unsure what to do
Always check a provider’s regulation, insurance and professional membership yourself before instructing them.
Next steps
If you would like to talk this through with someone qualified, you can read more about how we can help with trusts, or answer a few short questions in our trusts questionnaire. WillHarbour is an introduction service, not a law firm. With your permission, we share your enquiry with up to three suitable firms, which will explain their own fees and their referral arrangement with us before you decide anything.
Frequently asked questions
Do I need a trust?
Not necessarily. Many people never use a trust. Whether one is suitable depends on your family, your assets and your aims, so it is worth discussing with a qualified professional before deciding.
Can a trust be set up in a Will?
Yes. A Will trust is written into a Will and takes effect after death. The Will names the trustees and sets out how the assets should be used.
Who owns the assets in a trust?
The trustees are the legal owners, but they must manage the assets for the beneficiaries under the terms of the trust and the law.
Does every trust pay tax?
No. It depends on the type of trust and what it holds. Some trusts pay tax on income or gains, and some face Inheritance Tax charges. Many trusts also need registering with HMRC even if no tax is due.
Official sources
This guide is general information about the law in England and Wales at the time it was last reviewed. It isn’t legal, tax or financial advice. For advice on your own situation, speak to a qualified professional.
