A will can create several distinct trusts, each doing a different job. The main types are bare trusts, interest-in-possession trusts (including the Immediate Post-Death Interest, or IPDI), discretionary trusts, accumulation and mixed trusts, and a group of statutory trusts built specifically for vulnerable beneficiaries and minors. A smaller category, settlor-interested and non-resident trusts, catches out estates with cross-border assets or unusual family arrangements.

Which one belongs in your will depends on who you’re providing for and what you’re trying to control: income now versus capital later, flexibility versus certainty, or protection from a beneficiary’s creditors, divorce, or simple bad luck with money. Gov sets out the main categories used in wills, and the Trustee Act 2000 provides the default powers trustees rely on unless your will says otherwise.

Here’s the shortlist, with the one-line purpose behind each:

• Bare trust — a simple gift held for a named beneficiary, usually a child, who is treated as the outright owner for tax purposes.
• Interest-in-possession / life interest trust (including IPDI) — gives one person income or a right to live in a property for life, while the capital passes to others afterwards.
• Discretionary trust — hands trustees the power to decide who among a group of beneficiaries gets what, and when.
• Accumulation trust — lets trustees retain and reinvest income rather than pay it out immediately.
• Mixed trust — combines discretionary and accumulation or life-interest features in one structure.
• Vulnerable person’s / disabled person’s trust — a statutory trust with special tax treatment for beneficiaries who cannot manage assets themselves.
• Bereaved minor’s trust and 18-25 trust — statutory structures that hold assets for children until they reach a set age, with favourable Inheritance Tax treatment.
• Settlor-interested and non-resident trusts — specialist structures that trigger particular HMRC scrutiny and cross-border tax rules.

Table of Contents

• What is a bare trust and how does it work?
• How do interest-in-possession and IPDI trusts work?
• Why choose a discretionary trust in a will?
• Accumulation trusts and mixed trusts: what’s the difference?
• Statutory trusts: protecting vulnerable beneficiaries and minors
• When do settlor-interested and non-resident trust rules apply?
• How is each will trust taxed for IHT, income tax and CGT?
• How do you choose the right trust for your will?
• What happens after death: putting a will trust into effect
• Trustee powers and the drafting mistakes that cause disputes
• How Ali Legal Ltd approaches drafting will trusts for clients
• How our services can help: getting your will trust right
• Where to read more on trusts and tax rules
• Sources

What is a bare trust and how does it work?

A bare trust is the simplest structure a will can create. The trustee holds legal title to the asset, but the beneficiary has an immediate, absolute right to both the capital and the income. There’s no discretion involved and nothing to decide: once the beneficiary reaches the vesting age (18 in England and Wales, though this can differ elsewhere in the UK), they can demand the asset outright.

That immediacy is exactly why parents and grandparents use bare trusts for straightforward gifts to children. Leaving £20,000 to a grandchild “on trust until 18” is a textbook bare trust. The trustee manages the money in the meantime, perhaps paying school fees or releasing small sums, but the underlying entitlement never wavers.

Tax treatment follows that logic. Because the beneficiary is treated as the owner from day one, income and capital gains are usually assessed against them, not the trust, and gov.uk’s guidance on trusts and capital gains tax confirms bare trusts don’t attract the periodic Inheritance Tax charges that apply to discretionary structures. There’s no 10-year charge to worry about, because for IHT purposes the assets are already treated as belonging to the beneficiary.

• Best suited to: children or young adults who you’re comfortable receiving a lump sum at 18.
• Not suited to: beneficiaries who might mismanage a large inheritance, or where you want ongoing control past adulthood.

How do interest-in-possession and IPDI trusts work?

An interest-in-possession trust gives someone the right to income from the trust fund, or to live in a trust-owned property, for a defined period, usually the rest of their life. That person is the “life tenant.” When they die, the capital passes to whoever the will names next, the “remaindermen.” Nobody has to decide anything year by year; the sequence is fixed at the outset.

The sequence runs like this: beneficiary receives the life interest → income or occupation continues for their lifetime → on their death, capital moves to the remaindermen. It’s a relay, not a discretionary handout.

An Immediate Post-Death Interest, or IPDI, is the version created directly by a will taking effect on death, most commonly for a surviving spouse or civil partner. A widow might be given the right to live in the family home for life, with the property passing to the couple’s children once she dies. Deloitte’s TaxScape guidance notes that testators favour IPDIs precisely because the spouse exemption can apply to the surviving partner’s interest, while the capital is still ultimately protected for children from an earlier relationship or future generations.

IPDIs get a tax exemption that discretionary trusts don’t. Rather than being treated as “relevant property” subject to the 10-year periodic charge regime, an IPDI is treated as part of the life tenant’s own estate for Inheritance Tax. That means no periodic charge every decade, though the trust assets will be counted in the life tenant’s estate when they eventually die. Income arising during the life interest is generally taxed on the life tenant, and Capital Gains Tax broadly follows ownership of the underlying asset, with reliefs sometimes available when the interest ends.

• Common scenario: second marriages, where a testator wants their spouse provided for without disinheriting children from a first marriage.
• Common scenario: a family home held for a surviving parent, with the property ultimately going to the children.

Why choose a discretionary trust in a will?

A discretionary trust names a class of potential beneficiaries, perhaps “my children and their issue,” rather than giving any one person a fixed entitlement. Trustees decide who receives income or capital, how much, and when. Nobody in the beneficiary class has an automatic right to anything until the trustees actually make a distribution.

That flexibility is the whole point. Testators use discretionary trusts when they genuinely don’t know what the future holds: a blended family where needs are unclear, a beneficiary who might develop a drinking problem or run into debt, or simply a wish to keep options open for grandchildren not yet born. Trustees typically follow a letter of wishes, a private document setting out the testator’s intentions. It’s worth being clear with clients and beneficiaries alike that this letter is not legally binding; trustees can depart from it if circumstances demand, though in practice most follow it closely.

1. Testator identifies a broad beneficiary class rather than named individuals with fixed shares.
2. Trustees are appointed, often including a professional trustee alongside family members.
3. A letter of wishes is drafted alongside the will, guiding but not compelling trustee decisions.
4. On death, trustees begin exercising discretion, informed by the family’s actual circumstances at that point rather than assumptions made years earlier.

Picture a testator with three adult children: one financially secure, one with a disabled child of their own, and one going through a difficult divorce. A discretionary trust lets trustees direct more support where it’s genuinely needed at the time, rather than locking in equal shares that might suit nobody by the time the estate is administered.

Pro Tip: Update the letter of wishes every few years, and definitely after any major family change such as a birth, divorce, or falling-out. An outdated letter is one of the most common causes of trustees making decisions that clash with what the testator actually wanted.

Tax-wise, most discretionary trusts fall into the “relevant property” regime. That means a charge of up to 6% can apply every 10 years on the value of trust assets, and an exit charge may apply when capital leaves the trust, as gov.uk’s guidance on trusts and Inheritance Tax sets out. Trustees are also responsible for income tax at trust rates and for Capital Gains Tax on any chargeable gains within the trust.

Accumulation trusts and mixed trusts: what’s the difference?

An accumulation trust allows trustees to retain income within the trust and reinvest it, rather than distributing it to beneficiaries as it arises. That’s the key operational distinction from a straightforward interest-in-possession trust, where income must go to the life tenant. A mixed trust blends features, perhaps discretionary powers over capital combined with an accumulation power over income, or a life interest for one beneficiary running alongside discretionary provisions for others.

These structures suit situations where beneficiaries are too young to receive income sensibly, or where a testator wants trustees to build up a capital fund for a specific future purpose, such as university fees arriving in ten years’ time rather than pocket money now.

Tax treatment for accumulation and mixed trusts generally follows the relevant property rules where discretionary elements dominate, meaning the same 10-year charges and exit charges as standard discretionary trusts. Income that’s accumulated rather than distributed is still typically taxed at trust rates before it’s reinvested, and Capital Gains Tax applies to the trustees in the usual way when trust assets are sold.

Statutory trusts: protecting vulnerable beneficiaries and minors

Parliament has built specific trust structures into tax law for two groups: people who cannot manage money because of disability, and children who lose a parent. Both come with meaningful tax advantages precisely because the law recognises these beneficiaries need protection that ordinary discretionary trusts don’t guarantee.

A vulnerable person’s trust (sometimes called a disabled person’s trust) is available where the beneficiary meets specific statutory criteria, typically receiving certain disability benefits or being incapable of managing their own affairs. Gov.uk’s guidance on trusts for vulnerable people explains that these trusts can qualify for special tax treatment, effectively taxing income and gains as though they belonged to the vulnerable beneficiary rather than at the higher trust rates, provided strict conditions are met.

A bereaved minor’s trust arises where a parent leaves assets to their child, and the child will become absolutely entitled by 18. An 18-25 trust is similar but allows vesting anywhere up to age 25, giving families more flexibility over when a young adult actually takes control of significant assets. Both attract favourable Inheritance Tax treatment compared with an ordinary discretionary trust for the same purpose.

• A single parent with a young child might use a bereaved minor’s trust so life insurance proceeds are protected until the child turns 18, rather than handed over at a vulnerable age.
• A parent worried that an 18-year-old isn’t ready for a six-figure inheritance might specify a 25-year vesting age instead, buying seven extra years of trustee oversight.
• A parent of a disabled adult child might set up a vulnerable person’s trust specifically to preserve means-tested benefit eligibility while still providing for their long-term care.

Statutory trusts can sidestep the periodic charge regime entirely where the conditions are met. HMRC’s guidance on trusts and Inheritance Tax confirms that bereaved minor’s trusts and qualifying disabled person’s trusts fall outside the standard 10-year charge and exit charge rules that apply to ordinary discretionary trusts, which is a meaningful saving over the life of a long-running trust.

When do settlor-interested and non-resident trust rules apply?

Most will trusts are straightforward from a settlor’s perspective: the testator is dead, so they can’t benefit from the trust they’ve created, and the settlor-interested rules simply don’t bite. But complications arise in lifetime trust planning that later interacts with a will, or in second-marriage situations where a surviving spouse who is also a trustee has some retained benefit. HMRC scrutinises settlor-interested trusts closely because they can otherwise be used to keep assets nominally outside an estate while the settlor still enjoys the benefit of them.

Non-resident trusts raise a different set of problems. If a beneficiary, trustee, or asset sits outside the UK, or if the deceased was domiciled abroad, gov.uk’s guidance on non-resident trusts sets out reporting obligations and tax exposure that catch out estates without specialist advice. Foreign property, offshore accounts, and beneficiaries living overseas can all trigger additional filing requirements and, in some cases, double taxation risk if the interaction between UK and foreign tax rules isn’t managed properly.

• Watch for: any trust where the settlor, a spouse, or dependent children could conceivably benefit, even indirectly.
• Watch for: beneficiaries or assets based outside the UK, which usually means specialist cross-border advice is needed before the will is even finalised.

Pro Tip: If your estate includes property abroad, overseas investments, or beneficiaries living outside the UK, raise this with your solicitor at the drafting stage, not after death. Untangling a non-resident trust problem retrospectively is far harder, and often far more expensive, than planning around it from the outset.

How is each will trust taxed for IHT, income tax and CGT?

The baseline rule is simple even if the exceptions aren’t: trusts classed as “relevant property,” which covers most discretionary, accumulation, and mixed trusts, face a charge of up to 6% on their value every 10 years, plus an exit charge whenever capital leaves the trust. IPDIs, bereaved minor’s trusts, and qualifying disabled person’s trusts are carved out of that regime.

A worked illustration helps make the periodic charge tangible. Say a discretionary trust holds £500,000 of assets at its 10-year anniversary, after the available nil-rate band has been applied against it. A charge of up to 6% on the value above that band could, in a simplified scenario, run to several thousand pounds payable from the trust. This is illustrative only. The actual calculation depends on the nil-rate band in force at the time, any previous chargeable transfers by the settlor, and reliefs that may apply, so it’s not a substitute for a proper calculation by your solicitor or accountant.

Trustees also carry ongoing reporting duties. Gov.uk’s guidance on trustees’ tax responsibilities covers registration with the Trust Registration Service, self-assessment filing, and the records trustees must keep, obligations that apply regardless of which type of trust the will has created.

How do you choose the right trust for your will?

Start with the people, not the tax rules. Tax treatment matters, but it should follow from what your family actually needs, not drive the decision on its own.

Work through these questions before your solicitor meeting:

• How old are your beneficiaries, and will they be capable of managing a lump sum by the time they’d inherit outright?
• Does any beneficiary have a disability, addiction, or vulnerability that makes discretionary control more appropriate than a fixed entitlement?
• Are you in a second marriage or blended family where you need to balance a spouse’s needs against children from an earlier relationship?
• Do you hold assets, such as a family business or property, that need someone with specific powers to manage rather than simply distribute?
• Is your priority protecting capital from a beneficiary’s future divorce or creditors, or simply giving them what’s theirs as soon as possible?

Take these questions to your solicitor directly:

1. Will this trust create a 10-year Inheritance Tax exposure, and if so, roughly what might that look like over the trust’s likely lifetime?
2. Do the trustees have the powers they’ll actually need under the Trustee Act 2000, or does the will need to grant additional powers?
3. Is a letter of wishes appropriate here, and if so, who should be involved in drafting it?
4. What happens if a named trustee dies, refuses to act, or later has a conflict of interest with a beneficiary?

Watch for these red flags in a draft will:

• Trustee powers that rely entirely on the Trustee Act 2000 defaults, with no thought given to unusual assets like a business or overseas property.
• Vesting ages left ambiguous, or contradictions between different clauses about when a beneficiary becomes entitled.
• Lifetime gifts and will trusts drafted with no reference to each other, risking unintended tax consequences when they interact.

As a rough decision sequence: if a beneficiary is an adult capable of managing money now, a bare trust or outright gift is usually simplest. If someone needs income or a home for life while capital is preserved for others, a life interest or IPDI fits. If the future is genuinely uncertain, whether that’s family circumstances, a beneficiary’s capability, or both, a discretionary trust buys the flexibility to respond as things unfold.

What happens after death: putting a will trust into effect

A common misconception deserves clearing up early: creating a trust in your will does not avoid probate. The LexisNexis practice guidance on will trusts makes clear that trusts offer flexibility outright gifts can’t match, but that flexibility only kicks in once the estate has actually been administered. The will still normally needs a grant of probate before assets can move anywhere, into a trust or otherwise.

1. Executors apply for a grant of probate, which can typically take several months depending on the estate’s complexity and current backlogs.
2. Executors gather in the estate’s assets, settling any debts and calculating Inheritance Tax due.
3. Assets earmarked for a trust are formally transferred into the trustees’ names, a legally distinct step from probate itself.
4. Trustees register the trust with the Trust Registration Service where required, and begin ongoing administration, whether that’s paying income to a life tenant or exercising discretion under a discretionary trust.

Timelines vary considerably. A simple estate might complete probate within four to six months; a complex one involving a business, overseas property, or a disputed will can take a year or more before trustees are even in a position to act. Factors that commonly lengthen the process include multiple property valuations, tracing beneficiaries, and any dispute between family members over the will’s terms.

Cost drivers worth budgeting for include solicitor fees for the probate application itself, valuation fees for property or business interests, ongoing trustee fees where a professional trustee is appointed, and annual tax filing obligations for as long as the trust runs. It’s worth reviewing likely costs for wills, trusts and probate work before deciding how elaborate a trust structure your estate genuinely needs.

Trustee powers and the drafting mistakes that cause disputes

The Trustee Act 2000 gives trustees a sensible baseline: powers to invest, to obtain professional advice, and to delegate certain functions. For a straightforward cash legacy, those defaults are often perfectly adequate. They start to look thin the moment a trust holds something more complicated: a family business, a rental property portfolio, or overseas assets.

Common drafting mistakes tend to repeat themselves across estates of very different sizes:

• Granting only the statutory default powers when the estate includes a business interest that needs active management, not just passive investment.
• Leaving the beneficiary class in a discretionary trust too vague, creating uncertainty about who trustees are actually meant to consider.
• Never drafting a letter of wishes at all, or drafting one and then failing to update it for a decade while family circumstances change entirely.
• Setting a vesting age without considering whether the beneficiary is likely to be ready for full control at that point.

Pro Tip: If your estate includes a family business, ask your solicitor to include an express power to retain and manage business interests, an express power to borrow, and a power to appoint professional investment managers. Relying on the Trustee Act 2000 defaults alone often leaves trustees under-equipped for anything beyond a simple portfolio of shares and cash.

Getting this drafting right is where the difference between a will that works smoothly and one that ends up in dispute usually lies. As WillSafe’s practitioner summary of will trust types notes, the range of structures on offer, from bare trusts through to nil-rate band discretionary trusts, only delivers real protection when the drafting matches the family’s actual circumstances rather than a generic template. A step-by-step guide to drafting a will covers the broader drafting process alongside these trust-specific considerations.

How Ali Legal Ltd approaches drafting will trusts for clients

Every will trust starts with the same question at Ali Legal Ltd: what does this particular family actually need, not which trust looks most sophisticated on paper. That means proper factfinding before drafting begins, understanding beneficiary ages, family dynamics, business interests, and any cross-border complications, so the structure recommended fits the estate rather than the other way round.

Clarity in the drafting matters as much as choosing the right trust type. Vesting provisions get spelled out precisely, trustee powers are matched to the actual assets involved rather than left at the Trustee Act 2000 defaults by default, and tax planning is weighed against what the family genuinely wants to achieve, not just what minimises a bill on paper.

Ali Legal Ltd’s service scope in this area covers advice on which trust structure suits a given estate, the drafting itself, probate support once a testator has died, and ongoing advisory input on trustee appointments where families want guidance on who should hold that responsibility. For a fuller picture of what’s involved in tying a will and its trusts together properly, the wills, trusts and probate service overview sets out the detail.

How our services can help: getting your will trust right

Choosing between a discretionary trust, an IPDI, and a bereaved minor’s trust isn’t something to work out alone from a checklist, however good the checklist is. Ali Legal Ltd works through the practical questions above with clients directly: beneficiary ages, family complications, business assets, and what you’re actually trying to protect against, then drafts the trust to match, with fixed fees agreed upfront so there are no surprises once the paperwork starts.

That clarity extends beyond the will itself. Ali Legal Ltd also supports executors and trustees through probate once a trust needs to be put into effect, so the same team that drafted the structure can help administer it when the time comes, rather than handing you off to someone unfamiliar with the will’s intentions. If your estate includes a family business, overseas property, or a blended family situation that needs careful handling, that continuity from drafting through to administration is where a lot of avoidable disputes get headed off early.

If you’re ready to talk through which trust structure fits your circumstances, the wills, trusts and probate service page is the place to start, and you can arrange an initial conversation from there.

Where to read more on trusts and tax rules

• Trusts and taxes: types of trust (gov.uk) sets out HMRC’s own categorisation of the trusts covered in this article, and is the first stop for confirming which category a given structure falls into.
• Trusts and inheritance tax (gov.uk) explains the 10-year periodic charge and exit charge regime in detail, including the exemptions for IPDIs and statutory trusts.
• Trusts for vulnerable people (gov.uk) covers the specific conditions and tax reliefs available for disabled person’s trusts.
• Trusts and income tax (gov.uk) clarifies when trust income is taxed on the trustees versus the beneficiary.
• Will trusts: creation, uses, and Inheritance Tax treatment (Tolley) offers a practitioner-level reference on how these trusts interact with wider IHT planning.
• Will trusts and lifetime trusts (Which?) gives a plain-language comparison for readers wanting a less technical explanation before speaking to a solicitor.

This article provides general information on the types of trusts commonly used in wills and is not a substitute for individual legal or tax advice. Trust and tax rules change, and how they apply depends on your specific circumstances, so confirm the current position with your solicitor or the relevant government guidance before making decisions about your estate.

Sources

• Gov
• Inheritance tax: Wills and inheritance tax | TaxScape (Deloitte)
• What Is a Will Trust UK (2026)? Types, Uses & When You Need One (WillSafe)
• Will trusts: creation, uses, and Inheritance Tax treatment (LexisNexis UK)

Recommended

• Trust Law Explained: Asset Protection in the UK | Ali Legal
• How to draft a will: step-by-step for UK residents | Ali Legal
• Why Make a Will: Protecting Your UK Legacy | Ali Legal