Trusts are powerful legal tools, but the variety of options can be confusing. Here we explain the main types of trust available in England and Wales in 2026 and when each might be suitable.
Bare Trust: The simplest form. The beneficiary has an absolute right to both the capital and income. Commonly used for holding assets for children until they turn 18. From April 2026, bare trusts must be registered with HMRC's Trust Registration Service.
Life Interest Trust (Interest in Possession Trust): The beneficiary receives income from the trust assets during their lifetime, but the capital passes to someone else on their death. Often used by couples to protect assets for children from a previous relationship.
Discretionary Trust: The trustees decide how to distribute income and capital among a group of potential beneficiaries. This provides maximum flexibility and is useful for protecting assets from divorce, bankruptcy, or vulnerable beneficiaries.
Property Trust: A specific type of trust designed to protect your share of the family home. It allows you to ring-fence your property interest while giving your surviving partner the right to continue living in the home.
Charitable Trust: Used to benefit a charity or charitable purpose. Assets placed in a charitable trust are exempt from Inheritance Tax, making them an effective tax-planning tool.
Pilot Trust: A trust created during your lifetime with a nominal sum (often £10), designed to receive larger assets on your death via your Will. This can be useful for business succession planning.
At Castle Family Legal, we specialise in creating bespoke trust solutions. Whether you need a simple property trust or a complex discretionary arrangement, we'll guide you to the right option. Get in touch today.
