How Trusts Protect Wealth in High-Net-Worth Estate Planning
- Ray Best
- Dec 11, 2025
- 2 min read
What Families with £2M+ Estates Need to Know
Trusts are among the most powerful tools in inheritance tax planning, but they're also widely misunderstood. When used correctly, they can reduce tax exposure, protect assets, and provide structured wealth transfer across generations. For families managing estates above £2 million, trusts can be central to a long-term legacy strategy.
What Is a Trust?
A trust is a legal arrangement in which trustees hold assets for the benefit of the beneficiaries. The structure is governed by a legal document known as a trust deed, which outlines how assets are to be managed and distributed.
Types of Trusts Commonly Used in Estate Planning
Discretionary Trusts
Trustees decide how and when to distribute funds, offering flexibility and protection for evolving family circumstances.
Interest in Possession Trusts
One beneficiary receives income from the trust during their lifetime, while the capital passes to the other beneficiaries at a later date.
Bare Trusts
In its simplest form, a beneficiary has an absolute entitlement, often used for straightforward gifts to children.
Why Use a Trust?
Reduce Inheritance Tax
Assets placed into trusts may no longer form part of your taxable estate.
Protect Wealth
Trusts can shield family wealth from divorce, creditors, or financial mismanagement.
Control Distribution
Ensure that you pass on wealth gradually, responsibly, and according to your wishes.
Maintain Family Harmony
Reduce the risk of disputes by clearly defining rules and ensuring trustee oversight.
Common Pitfalls to Avoid
Ignoring the 10-Year IHT Charge
Discretionary trusts may incur periodic charges; planning ahead is essential.
Lack of Purpose
For every trust to be effective, it must have a clear goal and structure.
Choosing the Wrong Trustee
Trustees carry significant responsibility. They should be impartial, capable, and trustworthy.
The Bottom Line
Trusts are not one-size-fits-all; they require careful setup, expert legal drafting, and ongoing review. But when executed correctly, they offer unparalleled flexibility and protection for high-value estates.
At Future Family Inheritance Ltd, we design bespoke trust solutions tailored to your estate structure and long-term vision.
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