The ten-year periodic charge is an inheritance tax charge of up to 6% on the value of relevant property held in most trusts, assessed every ten years from the date the trust was created, under the relevant property regime.

No. The primary purpose is protecting the beneficiary's means-tested benefits and giving trustees structured control over how funds are used. Even modest estates benefit from the structure where a disabled child would otherwise inherit directly and lose access to Universal Credit or local authority care funding.

Yes, either by will or during lifetime, provided the grandchild meets the qualifying test. A lifetime trust lets grandparents contribute directly without routing gifts through the parents, and it can sit alongside any trust the parents already have in place.

No, if it is set up and run correctly. Trust assets do not count as the beneficiary's capital for Universal Credit or other means-tested benefits, because the beneficiary has no right to demand the money. Trustees must apply funds for their benefit rather than paying lump sums into their account.

If your child stops meeting the Schedule 1A conditions, the trust may fall back into the relevant property regime and face the standard discretionary trust charges. The trust deed should include provisions for this scenario. Specialist advice is essential at the drafting stage.

Yes. HMRC treats the disabled beneficiary as owning the trust assets for inheritance tax purposes. On your child's death, the trust fund aggregates with their personal estate. Their nil-rate band (£325,000 as of 2026 to 2027) applies in the normal way. However, in our advice very little is held in that trust thus avoiding that issue.

Yes. Some families set up a disabled person's trust for assets specifically intended for the disabled child and a separate discretionary trust for the wider family. This gives trustees flexibility where they need it while keeping the disabled beneficiary's tax and benefits position protected. We normally advise clients to set up the disabled persons trust as soon as possible but then make that trust one of the beneficiaries of any estate planning discretionary trusts set up for the wider family. This enables the discretionary trustees to drip feed money to the disabled persons trust thus avoiding future reductions in state benefits.

Excluded property trusts hold non-UK assets for non-UK long-term resident individuals, keeping them outside the UK inheritance tax net even if the settlor becomes long-term resident in the future. They're essential planning tools for internationally mobile individuals and can protect foreign assets from UK inheritance tax indefinitely.

Business relief plans and trusts serve different purposes and can be used together. Business relief plans provide inheritance tax relief through qualifying investments but carry investment risk. Trusts provide asset protection and control. The best approach often combines both strategies within comprehensive estate planning.

Discounted gift trusts require you to commit to fixed withdrawals for life, limit access to capital, and may not provide sufficient income flexibility if circumstances change. They also involve complex actuarial calculations and provide limited discount benefits. More flexible trust structures usually better suit most clients' needs.

Free trusts supplied by insurance companies are usually standard templates that may not suit individual circumstances.

They often lack flexibility, are difficult to adapt if family or tax rules change, and do not integrate well with wider estate planning. They are also typically provided without ongoing legal advice, which can limit their effectiveness over time. Bespoke trusts tailored to a family’s situation usually provide greater control and more robust inheritance tax planning.

Yes, children living abroad can be both trustees and beneficiaries. However, consider the trust's tax residence, trustees' duties under foreign jurisdictions, and potential complications in distributing to overseas beneficiaries. Professional advice is essential for international trust structures.

Pensions in trust and lifetime trusts serve different purposes. Pension trusts only deal with death benefits, while lifetime trusts can hold and protect various assets immediately. Multiple trusts allow asset segregation, different beneficiary structures, and varied distribution strategies for optimal inheritance tax planning.

An expression of wishes is a non-binding document that explains how you would like trustees to manage and distribute trust assets.

Although trustees are not legally required to follow it, the document provides helpful guidance on your intentions. This supports consistent decision-making while allowing trustees to retain the flexibility needed to respond to changing circumstances.

Independent trustees provide impartiality in family disputes, professional expertise in trust administration, continuity when family trustees are unavailable, and protection from claims that distributions were improperly influenced. They help ensure the trust is managed objectively and in accordance with fiduciary duties.

In a loan trust structure, beneficiaries aren't personally obligated to repay loans - the trust assets secure the debt. If you request repayment, trustees sell trust investments as needed. This structure is designed so repayment ability doesn't depend on beneficiaries' personal finances.

The trust deed will specify what happens to a deceased beneficiary's potential share. Typically, it passes to their children (your grandchildren) or is redistributed among remaining beneficiaries. You can usually amend trust provisions during your lifetime to reflect changed family circumstances.

Yes, a non-beneficiary spouse can be supported indirectly from your trust. Trustees distribute to a beneficiary, who may then use the funds to support their spouse. Additionally, trustees can pay for services or expenses that benefit the family unit, including non-beneficiary spouses. The trust deed wording determines the extent of permitted distributions.

Assets held in trust are generally not considered matrimonial assets in divorce proceedings, provided the trust is properly structured and the beneficiary doesn't have absolute entitlement. This can protect family wealth from being divided in a divorce settlement.

Yes, trusts carry ongoing costs and responsibilities, including annual tax returns, trustee meetings and record keeping. There are also periodic charges for inheritance tax purposes every 10 years, and professional management is often recommended to ensure compliance and optimal performance.

There's no legal limit on how much you can put into trust, but tax implications vary by amount and trust type. Gifts to discretionary trusts over £325,000 face immediate 20% inheritance tax charges. Loans to loan trusts have no immediate tax charge. The optimal amount depends on your circumstances and objectives.

While technically possible, putting your main residence into trust during your lifetime usually isn't advisable due to capital gains tax on transfer, loss of principal private residence relief, potential stamp duty, and inheritance tax complications. Better alternatives include tenants in common ownership or other planning strategies.

Yes, property can be placed into trust, but careful consideration is needed. You'll need to consider capital gains tax on transfer, stamp duty land tax, loss of main residence relief, and restrictions on future mortgage finance. For your main residence, alternative strategies may be more tax-efficient.

In a bare trust, beneficiaries have an absolute right to the assets and income when they reach 18. In a discretionary trust, trustees have complete discretion over distributions to beneficiaries. Discretionary trusts offer more flexibility and control but have different tax implications.

An inheritance tax loan trust allows you to lend money to trustees, who then invest it for the benefit of your chosen beneficiaries.

The original loan remains part of your estate, but any growth on the invested funds falls outside your estate for inheritance tax purposes. You can usually ask for the loan to be repaid at any time, which means you retain access to the capital while limiting inheritance tax on future growth.

Flexible reversionary trusts freeze the value of assets in your estate while allowing future growth to accumulate outside for beneficiaries. You retain access to benefits during your lifetime, but the growth escapes inheritance tax, making it an ideal balance of control and tax efficiency.

A trust is a legal arrangement where assets are held by trustees for the benefit of one or more beneficiaries.

Trusts can be used to manage inheritance tax, protect assets, and control how and when beneficiaries receive them. They are often helpful where family circumstances are complex, beneficiaries are vulnerable, or long-term succession planning is needed.

A flexible reversionary trust allows the settlor to retain benefits during their lifetime while passing future growth to beneficiaries. It's particularly useful because it provides inheritance tax advantages while maintaining access to capital if needed, offering both protection and flexibility.

An Immediate Post-Death Interest (IPDI) is a type of trust that takes effect on death and gives a beneficiary an immediate right to trust income.

It is often used between spouses or civil partners because it qualifies for the spouse exemption from inheritance tax. This can help preserve the transferable nil-rate band and provide flexibility in estate planning after the first death.

Lifetime trusts offer immediate inheritance tax benefits and allow you to see the trust in operation during your lifetime. They provide greater certainty and can be tested and adjusted if needed, whereas Will Trusts only come into effect on death and cannot be modified once established.