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Discretionary Trust Wills

The most flexible trust available — a pot of money held for a named class of beneficiaries, with the trustees deciding who gets what, when, and how. Powerful for blended families and vulnerable loved ones.

When a discretionary trust earns its keep

A discretionary trust is the Swiss Army knife of will planning. It creates a fund, names a class of people who could benefit from it, and leaves the actual decisions — how much, how often, to whom — to the trustees. You back that up with a private Letter of Wishes setting out your thinking.

That flexibility is the point. Rigid gifts in a will are fine when your situation is simple. But life isn't always simple, and wills written today will be read decades from now. A discretionary trust lets your trustees respond to circumstances you could not possibly have foreseen.

Typical situations where clients choose a discretionary trust include a disabled or vulnerable beneficiary who would lose means-tested benefits with an outright inheritance; a blended family where you want to provide for a second spouse but make sure capital ends up with your own children; a beneficiary with addiction issues, who is bankrupt, or going through a divorce; and protecting a grandchild's inheritance from their parents' creditors.

Discretionary Trust Wills

How a discretionary trust works in practice

In your will, you create the trust on death and name:

  • The trustees — usually two to four people you trust absolutely. Often a mix of family and a professional.
  • The class of beneficiaries — for example “my children and their descendants, and my spouse”. Broad enough to cover future needs, narrow enough to reflect your values.
  • The trust fund — could be your whole estate, a specific sum, or the residue after other gifts.

Alongside the will, we prepare a Letter of Wishes. This is not legally binding — it doesn't need to be — but it tells your trustees who you had in mind, what you'd want in common scenarios, and why. Letters of wishes can be updated at any time without re-executing the will.

Once you die, the trustees take legal ownership of the trust fund. They can invest it, distribute it, loan from it, or hold it untouched. They use the Letter of Wishes as their guide and their own judgement for the rest.

Discretionary Trust Wills advice

The trade-offs you need to know about

Discretionary trusts are not free and not painless. Here's the honest picture.

Trustee burden. Your trustees will need to make real decisions, keep records, file trust tax returns, and in many cases register the trust with HMRC's Trust Registration Service within 90 days. Choose people who are up to the job.

Tax. Trust taxation is complex. Discretionary trusts face 10-year anniversary charges and exit charges under the “relevant property regime”, plus income tax at higher rates on any income the trust retains. For most family trusts, sensible management keeps the numbers modest — but they are real.

Cost. Drafting a discretionary trust well costs more than a standard will. Running the trust costs something too. For small estates that's disproportionate; for medium and larger estates, it's well worth it.

We'll walk through all three with you before recommending a discretionary trust. If the benefits don't clearly outweigh the cost and complexity in your specific case, we'll steer you elsewhere.

Estate planning

Our approach to drafting

Template discretionary trusts exist online. Most of them are wrong, or right for a generic situation that isn't yours. The wording of the trust matters enormously — a wrongly drafted trust can be ignored, challenged, or tax-inefficient.

Every discretionary trust we draft is written around your family and your concerns. We take detailed notes during the consultation, we clarify who the primary beneficiaries are in practice, and we draft a Letter of Wishes that genuinely reflects your intentions.

We also brief your chosen trustees. It's no good giving someone power without explaining the duty that comes with it. Our Trustees' Guidance letter tells them what the trust is for, what records to keep, when to take professional advice, and when to distribute.

If the trust needs registering with HMRC, we tell your trustees how and when to do it. If you'd rather we handle that for them as a separate service, we can.

Common questions

Frequently asked

Are discretionary trusts worth it for small estates?

Usually not. The running costs, tax filings, and trustee burden are disproportionate for estates under a few hundred thousand pounds. For larger estates or those with specific protection needs, the maths changes. We'll be straight with you.

Can my spouse be a trustee and a beneficiary?

Yes — it's very common. A surviving spouse is often both a trustee (helping make decisions) and a member of the beneficiary class (able to receive distributions). It works fine if drafted properly.

What's the Trust Registration Service?

HMRC's register of trusts. Most discretionary trusts need to be registered within 90 days of being created, with ongoing updates. Missing the deadline triggers penalties. We'll explain the process to your trustees.

Can I change my mind later?

Yes — while you're alive, the will is yours. You can change the trust, the beneficiaries, the trustees, or scrap the trust entirely. You can also update the Letter of Wishes any time without redoing the will.

Related services

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Complex Wills

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Property Protection Trust

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Protect what matters most

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