Trusts Explained: A Practical Guide for
High-Net-Worth Families
Author: Ray L Best
1 October 2025
Trusts are among the most effective inheritance tax planning tools, yet often misunderstood.
Here's what families with £2M+ estates need to know.
What is a Trust?
A legal structure where trustees hold assets for beneficiaries, governed by a trust deed.
Types of Trusts Commonly Used
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Discretionary Trusts - flexibility for trustees to distribute as needed.
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Interest in Possession Trusts - income flows to one person, capital to another.
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Bare Trusts - simple, absolute entitlement for beneficiaries (often children).
Benefits of Trusts
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Remove assets from taxable estate.
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Protect assets from claims, divorce, or mismanagement.
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Allow controlled wealth transfer over generations.
Pitfalls to Avoid
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Ignoring 10 years IHT charges on discretionary trusts.
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Setting up without a clear purpose.
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Poor trustee selection.
Trusts, when used correctly, provide flexibility and protection unmatched by other tools. They require expert drafting and ongoing review.