What is a trust?
A trust is a legal arrangement in which one person, the settlor, transfers assets to trustees to hold and manage for the benefit of others. Legal ownership and benefit are split: the trustees hold title, the beneficiaries receive the value.
Trusts are used to control timing rather than simply to give — holding assets for children until they are old enough, protecting a vulnerable beneficiary, ring-fencing capital for children of a first marriage, receiving a life insurance payout outside the estate, or managing inheritance tax exposure.
The trade-off is cost and administration. Most trusts sit within the relevant property regime for inheritance tax, with a charge on entry above the nil rate band, a periodic charge every ten years, and exit charges when capital leaves. Trustees also have reporting duties, their own tax returns, and in most cases registration on HMRC's Trust Registration Service.
The variants below differ mainly in how much discretion trustees hold and when beneficiaries become entitled.