Discretionary Trust

Flexibility and Peace of Mind

‘I want to protect my daughter’s inheritance if she gets

divorced in the future’

‘I want flexibility, so my spouse, children and grandchildren receive what they need’

‘My son has a drug problem; I want peace of mind that

the money is used wisely for him, and not wasted’

‘I’d like to help my nephews go to university or buy their

first car, but don’t want to fix an amount of money they may

need in my Will’

‘My daughter has a learning disability, so I want people

I can rely on to manage her money’

There are many reasons why including a Discretionary Trust

in your Will can help your loved ones.

Flexibility
Asset Protection
Ability to respond to changing circumstances
Providing for multiple generations
Protection of vulnerable or young beneficiaries
Inheritance Tax planning

F R E Q U E N T L Y A S K E D Q U E S T I O N S

What is a Discretionary Trust?

In a standard Will, gifts are usually a fixed

sum of money or a percentage of your estate.

There is no flexibility if the circumstances of

your beneficiaries change.

A Discretionary Trust provides flexibility for

how assets in the trust fund are used.

Trustees will decide and consider the needs

of beneficiaries at the time.

Trust Fund: Can be the whole or a share of

your estate (property, savings, investments),

or specific assets or sums of money.

Beneficiaries: Individuals, a group of people

(e.g. my siblings) or charities.

Trustees: Decide when to give money

or assets to beneficiaries based on

circumstances at the time. Trustees have

legal responsibility for the trust.

Letter of Wishes: This document sits

alongside your Will and helps your trustees to

understand your aims for how the trust fund

should be used.

Who can be my trustees?

You can appoint family and friends (including

beneficiaries) but you must be confident they

will act fairly. Between two and four trustees

should be appointed. Alternatively, you can

appoint a professional trustee for neutrality

and expertise.

How does a Discretionary Trust protect assets?

Assets are protected because the beneficiaries

do not own the trust fund assets. Trustees will

only make distributions if they think it is wise. This

means your legacy is better protected from third

parties or being squandered by beneficiaries.

Are there any ongoing costs?

Discretionary Trusts have specific rules regarding

Income Tax, Capital Gains Tax and Inheritance

Tax. If the trust still exists two years after death,

the trustees must register the trust with HMRC

within 90 days. The exception is that if the trust

incurs a UK tax liability earlier than the two-year

anniversary, it must be registered within 90 days of

the tax liability arising. Your trustees may need to

seek financial, legal, or tax advice to manage the

trust correctly and tax-efficiently. These costs are

deductible from the trust fund. You may consider

such costs to be incidental and outweighed by

your reasons for including a trust and the benefits

this can bring.