Ten Reasons to Use a Trust

by | Oct 27, 2023

There is often a popular misconception that financial advisers only sell products and little mention is made of the financial planning aspects of their services.

Of the large number of advice-based solutions in the toolbox of the financial adviser, there is one that is often underutilised and it is the trust.  

Protecting, and increasing, wealth is one of the cornerstones of financial planning. The correct use of trusts plays a big part in this. 

10 uses of trusts in everyday financial planning
1. Nil rate band trust
For UK domiciles a NRB trust can “ bank” the band, currently at 325,000 GBP, upon the death of the first UK domiciled spouse. This has the advantage of protecting those assets held in trust when considering care fee planning.  The assets held in trust are not taken into account when assessing an individual’s contribution to the costs of care.
However, nil-rate band trusts claim whatever allowance is in force at the time of the first death, families could miss out as the IHT threshold changes in the years before the second spouse dies and so this needs to be considered as well. For elderly clients, this type of planning is clearly an issue that will be of interest.
2. Probate Delays

Avoiding probate can mean substantial savings in time, legal fees and paperwork. A trust allows your descendants to bypass this process and gain access to the assets and property more quickly. This is particularly important if funds are needed to pay the first installment of Inheritance Tax, legal fees, and other day-to-day things that the family will need if the breadwinner were to die.

A further benefit of using a trust is increased privacy. A will is a public document (i.e., anyone can go down to the probate court and review the contents of a will). However, a trust remains private. There is a register but that is not available to the public.

3. Protection against creditors

A protective trust can protect both business and personal assets from most creditors’ claims. A trust works because it splits ownership of trust assets; the trustee has equity ownership and the beneficiaries have beneficial ownership. 

4. Gifting to minors

A trust is an ideal way to protect gifts to minors and for the trustees to look after the capital until the children are at an age to look after their own financial affairs. 

5. Provide for those who cannot make their own decisions

It is not only minors who do not have the capacity to make financial decisions and such a trust could well ensure the financial wellbeing of those who are incapacitated, particularly should they outlive their other family members. 

6. Inheritance Tax (IHT) planning

For UK domiciled clients, there are a wealth of financial planning opportunities available to offset the affects of IHT. Key to a lot of this planning is the use of trusts. 

7. Life assurance in trust

Writing a policy into trust, not only provides funds without probate delays, these funds will be outside of the deceased’s estate for IHT and available for immediate disposal if required.

8. Contesting your wishes

A trust gives greater protection than a will against legal action from anyone who is unhappy with the distribution of assets and decides to challenge it. Whilst not ‘fireproof”, as there will be times when trusts are open to challenge, it is more difficult to do than to challenge a will.

9. Flexibility

Trusts can give power to the trustees to exercise discretion, over a long period of time, as to how capital and income is to be distributed. This power can continue long after the donors have died.

10. Charity

Trusts are an ideal way to provide funds to charity or suitable good causes. Again, these trusts can continue well beyond the life of the charitable donor. 

Private pensions

In addition, how many people have pension benefits in UK private or company schemes? Even though the benefits may be deferred, there is going to be an element of death benefit should the pension member die before taking benefits.

Thought should be given to contacting the scheme trustees and completing an “Expression of Wish” form. This will assist the trustees in considering how pension members would wish to have such benefits to be paid on death, possibly into another trust! 

Trusts in other jurisdictions

The impact of monies in a trust need to be considered in the light of the rules of different countries. A recent example is the change to how the French authorities want to deal with trusts that will affect expats who are French residents and are settlors or beneficiaries of a trust.

The FACTA rules will affect US individuals, citizens and tax residents. Trust firms that operate as trustees in which at least one settlor or beneificiary is a US individual will need to understand the reporting obligations related to these trusts. 


Trusts are a great tool to enable the financial adviser to link up with legal and tax specialists to help provide their clients with a truly holistic financial planning solution. The two examples, above, demonstrate why this could be important. They also allow the adviser to demonstrate to the other legal and tax specialists, just how trusts can benefit their own clients.

Financial advice is not about selling a product, it is about providing solutions and trusts provide many of these solutions.

Image by Drazen Zigic on Freepik

The views expressed in this article are not to be construed as personal advice. Therefore, you should contact a qualified, and ideally, regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. Consequently, if you do not, then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Importantly, where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.

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Post written by:

Chris Lean

In the UK he worked with accountants as an independent financial adviser, qualified as a Chartered Financial Planner and became an examiner for the Chartered Insurance Institute. He also qualified as a European Financial Planner and specializes in investment and pension advice to clients.

Aisa International is the only financial advice service company specialising in advice for expats that is regulated as a Securities Trader in the Czech Republic, USA, and UK.