We provide the complete commercial debt recovery service; from outsourced early arrears collections through to expert litigation, all handled in-house by a multi-award-winning law firm.
We provide the complete commercial debt recovery service; from outsourced early arrears collections through to expert litigation, all handled in-house by a multi-award-winning law firm.
We provide the complete commercial debt recovery service; from outsourced early arrears collections through to expert litigation, all handled in-house by a multi-award-winning law firm.
Leaving your assets to those closest to you is a final act of generosity. A discretionary trust ensures that this is carried out according to your wishes, providing for your loved ones just as you intended.
To speak with us about setting up a discretionary trust, simply complete the form, and one of our solicitors will get in touch to discuss how we can support you in managing the distribution of your assets.
Want to speak to us now? Call us on 01332 226 162.
DISCRETIONARY TRUST
A discretionary trust provides a structured way to manage your assets after death, offering flexibility and protection for your beneficiaries.
Unlike a standard trust, a discretionary trust gives trustees the authority to decide who receives funds, how much they receive, and when distributions take place. This added flexibility ensures that your assets are managed responsibly and in line with your wishes.
A letter of wishes typically accompanies the trust to guide trustees in their decision-making. While not legally binding, it serves as a valuable reference, helping trustees carry out your intentions effectively over time.
This estate planning tool is particularly useful for protecting vulnerable individuals—such as those with disabilities or financial difficulties—from mismanaging their inheritance. It can also help reduce tax liabilities by allowing assets to pass across generations without triggering immediate taxation.
Our Experience
Our STEP-recognised solicitors offer deep experience in estate planning, with a particular focus on the strategic use of trusts.
We work closely with clients to establish structures—such as discretionary trusts, disabled person’s trusts, or other tailored arrangements—that align with their financial, familial, and personal priorities.
Recognising that no two estates are the same, we provide bespoke advice to help determine the most appropriate trust structure for your circumstances. Whether you seek greater flexibility in asset distribution, protection for vulnerable beneficiaries, or long-term tax efficiency, our team ensures your intentions are clearly documented and legally robust.
From initial consultation to trust creation and ongoing administration, we guide you at every step, helping to secure your legacy with confidence.
Discretionary trust
Not all trusts are created equal—each type is designed with a specific purpose in mind and offers unique advantages and limitations. Understanding these distinctions is crucial to selecting the right trust structure that aligns with your personal goals and circumstances.
Some trusts may provide enhanced control over assets, while others focus on tax efficiency or protecting the interests of beneficiaries.
The table below summarises the key benefits and limitations of discretionary trusts compared to other common trusts, helping you make an informed decision about which option best meets your needs.
| Benefits | Limitations |
|---|---|
| Tailored asset management: Trustees oversee asset distribution, ensuring funds support beneficiaries appropriately. | Complex administration: Compared to standard wills, discretionary trusts require ongoing management and compliance. Our professional trustee service provides valuable assistance with administration. |
| Flexibility: A discretionary trust allows adjustments to be made as circumstances evolve, making it a highly adaptable option. | Trustee selection: Choosing the right trustee is key to ensuring the trust functions effectively. We guide you through this process to help appoint suitable individuals. |
| Protection for vulnerable beneficiaries: A discretionary trust provides security for individuals who may struggle to manage their inheritance. | Not ideal for unique circumstances: While effective, discretionary trusts may not meet the needs of some beneficiaries. In cases where a high standard of care is required, a disabled person’s trust may be a more suitable option. |
| Tax benefits: Mitigates tax liabilities by facilitating controlled asset transfers across generations. | Property transfers: If you aim to pass down property, a property trust might be a better alternative. |
| Peace of mind: Discretionary trusts help mitigate tax liabilities by facilitating controlled asset transfers across generations. | Charitable donations: Discretionary trusts are not best suited for those who wish to donate part of/or all their estate to a charity. This is better done via a charitable trust. |
Frequently Asked Questions
Discretionary trusts are subject to a periodic tax charge every 10 years, known as the “10-year anniversary charge.” This charge applies to the value of the trust’s assets that exceed the inheritance tax threshold and is typically up to 6%. With proper planning, the impact of this charge can be minimised.
Tax on discretionary trusts depends on the type of assets held, the income they generate, and how distributions are made. Income is generally taxed at the trust rate (currently 45%), and capital gains tax may also apply. Inheritance tax can be charged when assets are placed into the trust, at 10-year intervals, and when assets are distributed. We work with you to help manage these tax obligations efficiently.
Yes, assets placed into a discretionary trust during your lifetime are generally not subject to probate. This can expedite access to funds for beneficiaries and help maintain privacy. However, if the trust is established through your will, probate will still be required for the will itself.
If the trust was created during your lifetime, it will continue to be managed by the appointed trustees after your death. If the trust is created through your will, it takes effect after probate. In both cases, the trustees will manage the trust in accordance with your letter of wishes and distribute the assets as they see fit for the benefit of the named beneficiaries.
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