Why Set Up a Trust?

Trusts can help protect family assets, support loved ones and give you greater control over how wealth is passed on.

People commonly set up trusts to:

• protect assets for children
• reduce inheritance tax exposure
• support vulnerable beneficiaries
• protect property after death
• control how money is distributed in the future

At Howells Solicitors, our wills, trusts and probate solicitors advise individuals and families on creating trusts that reflect their personal and financial circumstances.

What Is a Trust?

A trust is a legal arrangement where assets are managed by one person for the benefit of another.

The people involved in a trust are usually:

Assets placed into a trust can include:

• money
• property
• investments
• land
• business interests

Trusts can be created during your lifetime or through your will.

Why Do People Set Up Trusts?

There are many reasons why someone may choose to create a trust.

Inheritance Tax Planning

Trusts are commonly used as part of inheritance tax planning. In some circumstances, placing assets into trust may help reduce the value of an estate for inheritance tax purposes. However, trusts are complex and tax rules can vary depending on:

• the type of trust
• the value of assets
• who benefits from the trust
• when assets are transferred

Professional legal and tax advice is important before setting up a trust.

Protecting Assets for Children

Parents and grandparents often use trusts to protect money or property for children until they reach a suitable age. This can help ensure assets are managed responsibly and used for the intended purpose. For example, a trust may delay access to funds until a child reaches:

• 18
• 21
• or another specified age

Supporting Vulnerable Beneficiaries

Trusts can help protect vulnerable beneficiaries who may not be able to manage assets independently.

This may include:

• disabled beneficiaries
• individuals with mental health conditions
• people receiving means-tested benefits

A properly structured trust can help provide long-term financial support while protecting the beneficiary’s interests.

Protecting Family Wealth

Trusts are sometimes used to protect family wealth across generations.

For example, individuals may wish to:

• preserve assets for children or grandchildren
• reduce the risk of assets leaving the family following divorce
• protect inherited assets from financial difficulties

Property and Care Fee Planning

Some people consider trusts when planning for later life and long-term care. However, transferring assets purely to avoid care fees can create legal and financial risks. Local authorities may still assess transferred assets in certain circumstances. Specialist legal advice should always be obtained before transferring property into trust.

What Are the Different Types of Trust?

Different trusts are designed for different circumstances.

Bare Trusts

A bare trust gives a beneficiary an immediate right to assets held in trust. These trusts are often used for children.

Discretionary Trusts

Discretionary trusts give trustees flexibility over how and when assets are distributed.

They are commonly used for:

• inheritance tax planning
• family wealth protection
• supporting multiple beneficiaries

Life Interest Trusts

A life interest trust allows one beneficiary to benefit from an asset during their lifetime, while preserving the asset for someone else in the future. These trusts are commonly used in wills to:

• protect children from previous relationships
• allow a surviving spouse to remain in a property
• control how assets are ultimately distributed

Trusts for Vulnerable Beneficiaries

Specialist trusts can be created to support vulnerable beneficiaries while protecting access to certain benefits and support arrangements. These trusts require careful drafting and specialist advice.

Can You Set Up a Trust During Your Lifetime?

Yes. Many trusts are created during a person’s lifetime. These are known as lifetime trusts.

People may create lifetime trusts to:

• transfer assets gradually
• carry out inheritance tax planning
• protect family wealth
• manage assets for children or relatives

Trusts can also be created through a will and only take effect after death.

Can a Trust Help Avoid Probate?

Assets held in trust may not form part of an estate for probate purposes. This can sometimes:

• simplify estate administration
• reduce delays
• provide greater privacy

However, probate and trust rules can be complex, particularly where property or tax issues are involved.

Can You Put Property Into a Trust?

Yes. Property can often be transferred into trust.

People may place:

• family homes
• investment properties
• buy-to-let properties

into trust arrangements.

However, transferring property into trust can create:

• tax consequences
• Stamp Duty implications
• mortgage complications
• capital gains tax issues

Legal advice should always be obtained before transferring property ownership.

What Are the Disadvantages of a Trust?

Although trusts can be useful planning tools, they are not suitable for everyone.

Potential disadvantages include:

• ongoing trustee responsibilities
• administrative requirements
• tax reporting obligations
• legal costs
• complex tax treatment

The right structure depends on your personal circumstances and long-term objectives.

How Much Does It Cost to Set Up a Trust?

The cost of setting up a trust depends on:

• the complexity of the arrangement
• the assets involved
• the type of trust required
• whether tax advice is needed

Simple trusts are generally less expensive than complex inheritance tax planning arrangements.

At Howells Solicitors, our solicitors can explain the likely costs and legal work involved before proceeding.

Should You Use a Solicitor to Set Up a Trust?

Trusts are legal arrangements with potentially significant tax and financial consequences.

A solicitor can help:

• identify the appropriate trust structure
• draft trust documentation correctly
• explain trustee responsibilities
• consider inheritance tax implications
• ensure the arrangement reflects your wishes

Mistakes in trust planning can create unintended tax liabilities or disputes in the future.

Why Choose Howells Solicitors?

Our wills, trusts and probate solicitors advise clients across:

• Cardiff
• Swansea
• Newport
• Bridgend
• Wales & England

We advise on:

• trust creation
• inheritance tax planning
• wills and probate
• estate administration
• vulnerable beneficiary trusts
• lifetime trusts

Our team provides clear, practical legal advice tailored to your circumstances and future planning goals.

Frequently Asked Questions

What is the purpose of a trust?

A trust allows assets to be managed on behalf of beneficiaries and can help with asset protection, inheritance tax planning and future financial planning.

Can a trust reduce inheritance tax?

In some circumstances, trusts may help reduce inheritance tax exposure. However, tax treatment depends on the type of trust and the assets involved.

Can you put your house into a trust?

Yes, property can often be transferred into trust. However, legal and tax advice should always be obtained first.

Are trusts only for wealthy people?

No. Trusts are used by many families for practical planning purposes, including protecting assets for children or vulnerable beneficiaries.

Who controls a trust?

Trustees are responsible for managing trust assets in accordance with the terms of the trust.

Speak to a Trust Solicitor

At Howells Solicitors, our experienced trusts and probate solicitors can advise you on:

• setting up a trust
• inheritance tax planning
• protecting family assets
• trusts for children
• vulnerable beneficiary trusts
• will trusts

We will explain your options clearly and help you decide whether a trust is appropriate for your circumstances.