Understanding Trusts: A Guide from AHJ Wills & Estates

Hello, I’m Andrew, and I head the team here at AHJ Wills & Estates. Over the years, one of the questions I’m asked most often is about trusts: what they are, why they’re used, and whether they are relevant for a family’s estate planning.

Trusts can sometimes sound complicated, but with the right advice they can be a very practical way to protect assets and support loved ones. In this blog, I’ll explain the basics, the different types of trusts available in England and Wales, and how they work in real life.

What is a trust?

A trust is a legal arrangement where assets are managed by people you choose (known as trustees) for the benefit of others (known as beneficiaries). Trusts give you greater control over how and when your wealth is used, rather than simply passing everything on directly.

For example, you might leave money in trust for young grandchildren until they reach a certain age, or you might want to provide a home for a surviving spouse while ensuring the property ultimately passes to your children.

Lifetime trusts vs Will-based trusts

There are two main ways to set up a trust:

• Lifetime trusts are created while you are alive. Assets are transferred into the trust straight away, and trustees begin managing them immediately. Lifetime trusts can be useful for tax planning or for managing funds on behalf of vulnerable beneficiaries.

• Will-based trusts are set up through your Will and only come into effect after your death. They are a common way of protecting family assets, particularly the home, while still allowing a spouse or partner to benefit during their lifetime.

Both types have their place, but they work in very different ways. The right option depends on your circumstances, your family, and what you want to achieve.

When are trusts used?

Trusts can be helpful in many situations. For example:

• Leaving assets for children or grandchildren who are too young to inherit outright.

• Providing for a second spouse or partner, while ultimately protecting wealth for children from a first marriage.

• Supporting a loved one who has a disability or is vulnerable, ensuring their inheritance is managed responsibly.

• Giving trustees flexibility to decide how funds are distributed, particularly if family circumstances might change.

It’s important to note that while some people ask about trusts and care home fees, local authorities can treat this as deliberate deprivation of assets if they believe the main purpose was to avoid paying for care. Trusts must always be created for genuine, lawful estate planning reasons.

Practicalities of trusts

When setting up a trust, you’ll need to:

• Choose trustees carefully – they must be people you trust to act responsibly, as they will have control over assets.

• Decide on beneficiaries – who the trust is for, and in what circumstances they benefit.

• Consider tax implications – trusts can affect inheritance tax, income tax, and capital gains tax, so professional advice is essential.

• Record your wishes clearly – whether in your Will or in a trust deed, clarity avoids future disputes.

Trusts can last for many years, so it’s vital they are set up correctly from the start.

How AHJ Wills & Estates can help

At AHJ Wills & Estates, our team has extensive experience in advising on and creating trusts. We make the process clear, explain the benefits and limitations, and ensure that everything is done properly and in line with the law of England and Wales.

Trusts are not right for everyone, but where they are appropriate, they can give families security, protection, and peace of mind.

If you would like to know more about trusts and how they might fit into your estate planning, we’re here to help.

Contact AHJ Wills & Estates today:
Telephone: 0114 553 5416
Email: info@ahjwillsandestates.com