What is a Will Trust?

A Will trust is a legal arrangement created as part of a person’s Will. It can be thought of as a gift with conditions attached, for example leaving an inheritance to a child where they receive their inheritance on their 25^th birthday.

Trustees appointed in the Will look after the inheritance for the people who are to inherit from the trust (known as beneficiaries). The Will sets out instructions about how the trustees should manage and distribute the assets. For example, it may be that the trustees are to look after money for a particular beneficiary until they reach a certain age. Alternatively, the trustees could be given power to choose who to pay from a pool of potential beneficiaries.

When does a Will Trust come into effect?

The trust only comes into effect upon the death of the Will creator, also known as the testator. It is possible for a person to set up trusts during their lifetime that come into effect straight away however, Will trusts only come into effect when the testator dies.

What powers do the Trustees have?

The Will sets out the terms of the trust including any conditions and instructions that the trustees must follow. The trustees have a legal duty to manage the trust’s assets in the best interests of the trust and the beneficiaries. The trustees cannot go against the terms and conditions of the trust simply because they disagree with them.

Common terms including giving a beneficiary the right to occupy a property for their lifetime or to receive income from savings. When that beneficiary dies, the funds are to be given to the other beneficiaries (often family members). Some trusts (known as discretionary trusts) give the trustees a lot of power and they can decide which beneficiaries receive payments from the trust and how much they should receive.

“You took your time to explain everything to us”

Common reasons for using a Will Trust

The main intention of a Will trust is to manage and distribute the testator’s assets according to any conditions and instructions set out by the testator. Often a trust is used to provide financial support for the people chosen to benefit over time or to provide an element of protection for the beneficiaries.

In some circumstances Will trusts can be used to protect assets from care fees, save Inheritance Tax and provide long term support for vulnerable people such as those living with a disability.

“Explained clearly in plain English and promptly”

Three popular reasons for using a Will Trust

Providing for spouses and civil partners

A trust can be created to ensure the surviving person always has a place to live and to provide them with a regular income. When they die, the property and other assets pass onto the testator’s chosen beneficiaries (usually their children).

With this type of trust, the assets in the trust are not owned by the surviving spouse or civil partner which means the capital value of the assets in the trust are not taken into account when assessing their eligibility for means tested care fees.

Protecting minor children

Will trusts are often used to manage and distribute assets to minor children. The trust can provide for their education, living expenses, and other needs until they reach a specified age.

This can ensure that the inheritance is protected until they are hopefully mature enough to manage the inheritance themselves whilst also giving them access to funds if they need it e.g. for educational purposes.

Providing for vulnerable and disabled people

A Will trust can ensure that vulnerable and disabled beneficiaries have financial security without the disruption caused by affecting their means tested benefits. Discretionary trusts are commonly used to provide flexibility, particularly if it isn’t appropriate for beneficiaries to receive large sums of their inheritance or have control of certain assets (for example due to addiction, spending habits or outside influences). It is also possible to create a Will trust for a disabled person although various conditions must be satisfied for these types of trusts to be effective.

How we can help

Our specialist Solicitors Paul Clark and Natasha Yelland can provide advice on Will trusts.

If you do not have a Will in place or you have a Will and would like us to review it, then please email Paul or Natasha. Alternatively, please call us on 01260 769 639 to make an appointment.

We offer a free initial consultation at our Congleton office or in your own home. Alternatively, meetings can be carried out via telephone or online (e.g. via Teams).