• Kylie Simmonds-Cox

Three Reasons Why Your Clients Might Need a Trust

Trusts are an important part of estate planning and enable your clients to ring-fence their assets and provide protection to their beneficiaries. Trusts can be used for a variety of reasons and here are our top three:

Protecting Beneficiaries

Trusts are flexible and can be tailored to your individual clients needs and personal situation. For example, does your client have a beneficiary who is unable to manage their own affairs? Or do you have a client whereby one of their intended beneficiaries can't be trusted with money, perhaps because of addiction? By setting up a Trust, the trustees can have the ultimate say over who is to benefit, when they benefit and what they will receive. This means that because the beneficiary isn't entitled and any payment they receive is at the discretion of the trustee, then it will not impact upon any means-tested benefits and their inheritance can't be squandered, which perhaps could be the case with an outright gift.

Protecting Assets

Placing assets in Trust can effectively ring-fence them from creditors, marriage breakdown or from vulnerable beneficiaries exposed to undue pressure and influence. Nobody knows what the future may hold and family and personal circumstances can change all the time. It is important to realise that the circumstances of your client's family can impact upon their own estate planning. For example, what would happen if your client's child divorced, would their former spouse be entitled to any inheritance as part of their divorce settlement? What about if a beneficiary dies, who would then ultimately inherit your clients assets? Trusts can be a flexible way of helping to mitigate such changes in circumstances and can help avoid any risks to your clients assets.

Minimising Tax and Costs

There can also be some tax advantages to careful estate and trust planning which your clients could benefit from. Simply put, any asset placed into trust will no longer form part of your client's estate and so providing they survive the relevant period, this could mean substantial savings in tax. Alongside this, upon the death of your client any assets held in trust do not form part of their estate for Probate purposes and as such can avoid the need for probate which could save time, legals fees and paperwork.


Trusts are very common and play a key role in many aspects of everyday life. Many people, often without realising it; will come into contact with a trust in one form or another at some point during their lives. Yet trusts are widely misunderstood and often seen as something just the wealthy need to be concerned with.

But trusts are particularly useful when planning how money and assets should pass from one generation to another, especially when family structures are complicated by divorces and second marriages. This; coupled with the growing frequency of marriage breakdowns, an ageing population and rising prosperity; makes trusts an excellent tool for long-term planning to ensure a family’s financial stability and security.

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