Skip to main content
WUHLD
← Back to glossary

Will Trust

Also known as: Testamentary Trust, Trust Created by Will

Definition

A will trust (or testamentary trust) is a legal arrangement created through your will that comes into effect when you die, placing your assets under trustees' control to manage and distribute according to your specific instructions.

Will trusts are fundamental to UK estate planning, enabling you to protect beneficiaries, control timing of inheritances, and address complex family situations that simple outright gifts cannot resolve.

What Does Will Trust Mean?

Under English and Welsh law, a will trust creates a legal relationship between the testator (you, as the person making the will who becomes the "settlor" in trust terminology), trustees (who manage assets), and beneficiaries (who benefit from the trust). The Recognition of Trusts Act 1987 provides the legal framework for trusts created "on death." Unlike lifetime trusts created while you're alive, will trusts only come into effect when you die, meaning you retain complete control of your assets during your lifetime with no immediate tax charges.

For a will trust to be legally valid, it must satisfy the Three Certainties principle established in Knight v Knight (1840): certainty of intention (clear intent to create a trust), certainty of subject matter (identified trust property), and certainty of objects (clearly identified beneficiaries). Your executors obtain a grant of probate, then transfer trust assets to the trustees you've appointed, who manage and distribute them according to the trust terms you've written into your will. The trust is irrevocable once you die—changes are only possible through deeds of variation (within two years, requiring beneficiary consent) or court applications.

Different types of will trusts serve different purposes. Discretionary trusts give trustees power to decide how and when to distribute income and capital among beneficiaries, providing maximum flexibility for uncertain future circumstances. Life interest trusts (also called interest in possession trusts) allow one beneficiary to receive income or use assets for their lifetime, with the capital passing to other beneficiaries afterward—commonly used in blended families where you want to provide for a current spouse while preserving assets for children from a previous relationship. Bare trusts hold assets for minors until they reach a specified age (typically 18, 21, or 25). Vulnerable beneficiary trusts provide special protections and tax treatment for disabled or vulnerable beneficiaries.

Consider Sarah, a single mother of two children aged 8 and 11, who creates a will trust for her £400,000 estate. She appoints her sister Emma as trustee and specifies that each child receives 25% of their share at age 21, 25% at age 25, and the remaining 50% at age 30. When Sarah dies, Emma manages the investments, uses trust funds for the children's education and welfare, and distributes capital in stages—preventing an 8-year-old from receiving £200,000 outright and ensuring the inheritance lasts through university and early careers.

Will trusts involve significant ongoing costs and responsibilities. Professional trustees typically charge 0.5-1.5% of trust assets annually, accountants charge £300-£800 yearly for trust tax returns, and legal fees add further costs. For a trust lasting 15 years, total costs often exceed £10,000-£30,000. Trustees have strict legal duties under the Trustee Act 2000: they must invest prudently, keep detailed accounts, act impartially between beneficiaries, and comply with their fiduciary responsibilities. Personal liability exists for breaches of duty, making the trustee role a significant commitment.

Tax treatment varies dramatically by trust type. Assets in your will trust form part of your estate and are subject to inheritance tax at 40% on amounts exceeding the nil-rate band (£325,000) and residence nil-rate band (up to £175,000) when you die. However, certain structures provide IHT planning benefits—for example, discretionary trusts can help couples utilize both partners' nil-rate bands. Most discretionary will trusts face periodic IHT charges every 10 years (up to 6% of trust value) and exit charges when assets are distributed, whereas bare trusts and some life interest trusts have simpler tax treatment. Will trusts must be registered with HMRC's Trust Registration Service (TRS) if still holding assets two years after death, though if the estate is fully administered within two years, no registration is required.

Common Questions

"What's the difference between a will trust and a lifetime trust?" A will trust is created in your will and only comes into effect when you die, with no immediate tax charges. A lifetime trust is created and funded while you're alive, giving you potential IHT savings if you survive seven years, but may trigger an immediate 20% tax charge on assets exceeding £325,000. Will trusts are simpler to set up and allow you to retain control during your lifetime.

"Do I need a will trust if I have young children?" If your children are under 18, you legally need some form of trust arrangement because minors cannot directly inherit property. A will trust ensures your assets are managed responsibly by trustees you choose until your children reach an age you specify (commonly 18, 21, or 25). Without a trust, the court appoints someone to manage inherited assets under statutory trusts.

"How much does it cost to set up a will trust in the UK?" Setting up a will trust through a solicitor typically costs £500-£1,500 for individuals (£750-£2,000 for couples), depending on complexity. However, ongoing costs matter more: professional trustees charge 0.5-1.5% annually, plus accountancy fees (£300-£800 yearly) for trust tax returns. Simple trusts terminating when children reach adulthood cost less to administer than complex discretionary trusts.

Common Misconceptions

Myth: "A will trust is the same as putting my will 'in trust' with a solicitor for safekeeping."

Reality: A will trust is a legal arrangement written into your will that controls how your assets are distributed after death, not a storage service. When solicitors offer to hold your will "in trust," they simply mean storing the document safely. A will trust means trustees manage and distribute your assets according to specific terms you've included in the will itself, often over many years. Confusing these terms leads to serious misunderstandings about estate planning.

Myth: "Will trusts avoid inheritance tax completely."

Reality: Will trusts do not automatically avoid inheritance tax. Assets in your will trust still form part of your estate and are subject to IHT at 40% on amounts exceeding the nil-rate band (£325,000) and residence nil-rate band (up to £175,000) when you die. However, certain trust structures can provide IHT planning benefits—for example, discretionary trusts can help couples fully utilize both partners' nil-rate bands, and assets held in trust may not be counted in beneficiaries' estates later. Tax savings come from strategic planning, not automatic exemption, and relevant property trusts face periodic charges every 10 years.

Understanding Will Trust connects to these related concepts:

  • Trust: Will trust is a specific type of trust—the broader legal category that includes lifetime trusts, charitable trusts, and statutory trusts.
  • Testator: The person who creates the will trust through their will, becoming the "settlor" in trust terminology upon death.
  • Trustee: Individuals or institutions appointed to manage and administer the will trust after the testator's death, with duties under the Trustee Act 2000.
  • Beneficiary: People or charities who benefit from the will trust, receiving income, capital, or both according to trust terms.
  • Life Interest Trust: A specific type of will trust commonly used in blended families, where one beneficiary receives income or use for their lifetime before capital passes to others.
  • Discretionary Trust: Another specific type of will trust offering maximum flexibility, where trustees have power to decide distributions among beneficiaries.
  • Minor: Children under 18 who cannot legally inherit property directly, making will trusts essential when children are beneficiaries.
  • School Fees in Your Will: What Parents Should Know: Will trusts provide the legal framework for earmarking and managing funds for children's education over many years.
  • Estate Planning Checklist: 10 Steps for 2025: Understanding will trusts helps you determine whether trust arrangements should be part of your comprehensive estate plan.
  • Can You Refuse to Be an Executor of a Will?: Executors are often appointed as trustees of will trusts, and understanding executor duties helps clarify the related trustee responsibilities.
  • How to Protect Your Estate from Business Debts: Discretionary will trusts can protect inherited assets from beneficiaries' business creditors or bankruptcy.
  • Discretionary Trusts in Wills Explained: Detailed exploration of one specific type of will trust, with focus on trustee discretion and relevant property IHT treatment.
  • Property Protection Trusts for Homeowners: Life interest trusts in the family home are specialized will trusts showing practical application to property protection.
  • Bare Trusts for Children: Pros and Cons: The simplest type of will trust for children, with different tax treatment and less flexibility than discretionary trusts.
  • Using a Deed of Variation to Change a Will: Beneficiaries can use deeds of variation to create or modify will trust provisions within two years of death.

Need Help with Your Will?

Will trusts are complex legal arrangements requiring careful drafting to ensure they meet the Three Certainties test and achieve your estate planning goals. Professional advice is essential for structuring trust provisions correctly and understanding tax implications.

Create your will with confidence using WUHLD's guided platform. For just £99.99, you'll get your complete, legally binding will plus three expert guides. Preview your will free before paying anything—no credit card required.

Legal Disclaimer: This glossary entry provides general information about UK legal terminology and does not constitute legal, tax, or financial advice. Will trusts are complex legal arrangements with significant tax and administrative implications. The information provided is current as of October 2025, but trust law and HMRC requirements may change. Always consult a qualified solicitor or tax advisor for advice specific to your circumstances before creating a will trust.