Contents
Key Takeaways
Trusts give families control over how wealth is used, allowing assets to be protected, managed and passed on across generations under clear, legally defined rules rather than default inheritance outcomes.
Trusts are most valuable when future uncertainty exists, including planning for loss of capacity, changing family circumstances or concerns about beneficiaries managing significant wealth.
Trusts are often dismissed due to perceived cost and complexity, but for larger estates, they can be a proportionate and effective part of long-term inheritance tax and estate planning.
The level of control depends on the trust structure chosen, with different trusts offering varying balances between flexibility, access and inheritance tax efficiency.
Trusts work best as part of a wider financial plan, requiring clear objectives, professional advice and regular review rather than being treated as a standalone or one-off solution.
Family wealth is often built with long-term intentions, but arrangements put in place at one stage of life do not always remain appropriate later on. As family circumstances change, issues around capacity, responsibility and control can expose weaknesses in structures that once felt sufficient [1]. Trusts sit within this reality. While they are frequently perceived as complex or relevant only to a narrow group of families, they remain a practical tool for managing how assets are controlled, protected and passed on over time.
To understand how trusts are used in practice, and where they genuinely add value, we spoke with Ian Cook, Financial Planner at Quilter Cheviot, whose work focuses on long-term family planning and intergenerational wealth.
What Trusts Are Designed to Do
Stripped of legal terminology, a trust is best understood as a mechanism for control. In law, it is treated as a separate entity, allowing assets to be managed according to predefined rules rather than owned outright by an individual. This separation enables families to determine how assets are used, who benefits from them and under what circumstances, rather than relying on default legal outcomes [2].
As Ian explains, this structure allows trusts to serve a range of purposes. They are often used to plan for loss of capacity later in life, ensuring assets can continue to be managed responsibly if an individual is no longer able to do so themselves. In other cases, trusts are used to pass wealth to the next generation while retaining safeguards around timing, access and responsibility [3].
Why Trusts Enter the Conversation
Trusts are rarely established without a clear reason. In most cases, they arise from uncertainty about the future rather than tax considerations alone. As people get older, concerns around health, capacity and long-term decision-making naturally become more prominent. Having assets held within a trust, managed by trustees chosen in advance, can provide reassurance that money will be handled appropriately even if circumstances change [4].
Concerns about the next generation are equally common. Families may want to pass wealth forward but remain cautious about financial maturity, vulnerability or shifting family dynamics. In these situations, a trust can introduce structure and oversight, allowing assets to be distributed gradually or conditionally rather than transferred outright. In some cases, that oversight continues beyond the lifetime of the person who established the trust.
Why Trusts Are Often Dismissed Too Quickly
Despite their practical uses, trusts are often set aside because of assumptions around cost and complexity. Ian notes that cost is usually the first concern raised by families, with many assuming trusts are disproportionately expensive. While trusts do involve setup and ongoing administration costs, these need to be assessed in context rather than in isolation [5].
For families already using professional financial arrangements, the costs are often comparable to those associated with other structures they already have in place. When weighed against the level of protection, oversight and continuity a trust can provide as part of a broader financial plan, those costs can be proportionate. The greater risk lies in ruling trusts out without understanding whether they are suitable in the first place.
Control Depends on Structure
A critical point that is often overlooked is that not all trusts operate in the same way. Some involve making an outright gift for a specific individual, with control ending once the beneficiary reaches adulthood. In these cases, the trust provides temporary structure but little long-term flexibility.
Other structures, such as discretionary trusts, allow trustees to decide how and when assets are distributed and to adjust those decisions as circumstances evolve. This flexibility can be particularly valuable in long-term family planning, but it comes with trade-offs, especially around tax treatment. Understanding how much control is genuinely required, and for how long, is essential before deciding which structure is appropriate.
Where Families Should Start
Before considering structure, tax or technical detail, Ian is clear that families should focus on fundamentals. Identifying the right professional is critical, particularly as trust planning is rarely a one-off decision. It often develops over time as families gain clarity around their objectives, responsibilities and long-term intentions.
Education plays a central role in this process. Trusts are more regulated than they once were, and families need to understand who will act as trustees, how decisions will be made and whether those individuals would genuinely act in their best interests if circumstances change. Without that clarity, even well-designed structures can fail to deliver their intended outcomes.
Deciding Whether a Trust Is Appropriate
Trusts are not suitable for every family, and one of the first questions Ian asks clients is whether they are genuinely comfortable giving money away under defined terms. Trusts can be effective, but they require commitment and a clear understanding of what is being given up in exchange for control or protection.
Scale also matters. For smaller sums, simpler arrangements such as outright gifts or basic savings structures may be more appropriate [6]. Trusts tend to become more relevant as asset values increase and the consequences of poor planning become more significant, making professional advice particularly important.
Trusts Are Not Standalone Solutions
Crucially, trusts should not be viewed in isolation. They form one component within a broader financial framework rather than a standalone solution. There is an inherent balancing act between tax efficiency and control, with structures that offer greater flexibility often involving higher tax exposure [7].
As Ian explains, the right approach depends on priorities rather than formulas. What matters is how the trust fits alongside other elements of a family’s financial planning, rather than how it performs in isolation.
Trusts Still Work, But Not by Default
Trusts remain a valuable planning tool, but they are not effective by default. Their success depends on clear objectives, informed decisions and ongoing engagement. Used for the right reasons and supported by proper advice, they can help families protect assets, manage risk and retain oversight across generations.
What they require in return is clarity, realism and a willingness to plan ahead rather than rely on assumptions that may no longer hold.
