Trusts, in plain English

What a trust actually is

A trust splits ownership in two. One set of people, the trustees, hold something legally; another set, the beneficiaries, are the ones who benefit from it. The person who put it there is the settlor, and the rules are written down — in a trust deed, or in a clause in a Will.

That is the whole idea. The trustees are not the owners in any way that helps them; they hold the asset for somebody else, they have to follow the rules they were given, and the beneficiaries can hold them to it.

It sounds elaborate and often is not. Leaving a grandchild's share to be held until they are 25 is a trust. So is leaving your share of a house to your children while your partner goes on living in it.

Trusts in a Will, and trusts made in your lifetime

A trust in a Will comes into existence when you die. Until then nothing has changed, nothing has left your ownership, and you can rewrite the Will as often as you like.

A lifetime trust is a different animal. Assets have to be transferred into it now, and you genuinely give them up — that is what makes it a trust rather than a filing arrangement. The tax treatment, the reporting, and the consequences of getting it wrong are all more serious.

Most of what this firm prepares is the first kind: a trust written into a Will, doing a specific job for a specific beneficiary.

The reasons people genuinely use one

A beneficiary who is too young. Without a trust, a child's share is handed over outright at 18. A trust lets you set a later age, or let trustees pay out for education or a deposit in the meantime.

A beneficiary who is vulnerable, or who receives means-tested benefits. A lump sum can do real damage to somebody's entitlements and to somebody's life; a trust lets money be used for them without being theirs.

Second families. Where you and your partner each have children from an earlier relationship, leaving everything to each other means whoever survives can leave the lot to their own children. A trust over your share of the home lets your partner live there for life and your share still reach your children.

And a beneficiary whose circumstances are unstable — going through a divorce, or facing creditors — where an outright gift may not stay with them for long.

When a trust is not needed

Most of the time. If the shape of your estate is everything to your husband or wife, and then equally between your adult children, a straightforward Will does that completely and a trust adds nothing but cost.

Trusts are not free and they are not finished when the document is signed. Trustees have to act, accounts may have to be kept, tax returns may be due, and most trusts have to be registered with HMRC's Trust Registration Service and kept up to date. A trust that nobody administers properly is worse than no trust at all, because it creates obligations that are being breached.

Be sceptical of anybody who recommends a trust before asking anything about you. The right answer to 'do I need a trust?' is often no, and it is an answer we give frequently.

Be careful with care-fee promises

You will find websites promising that a trust makes your home invisible to the local authority. Be careful with that.

If a council decides the main reason you put your home into a trust was to avoid paying for care, it can assess you as though you still owned it — and it can look back years to do so. That is what deprivation of assets means, and it is not a technicality.

A trust set up for sound reasons, at the right time, can genuinely protect a share of a home. One set up as an avoidance scheme often protects nothing, costs a great deal, and lands on the family at the worst possible moment.

How to tell whether you need one

Start with what you are actually worried about. A young beneficiary, a second family, somebody who cannot manage money, a partner who needs to stay in the house — those are problems a trust is built for. 'Protecting the house' in the abstract usually is not.

A trust of the kind most people ask about sits inside a Will, so the Will is the thing you make. You can do that online here, in your own time, and every answer is checked by an experienced legal professional before anything is issued.

The trust itself is priced according to complexity, so you get a written quote for that part before any work begins — and if the honest answer is that you do not need one, that is what you will be told.