Do You Need a Trust in Your Will?
When a Will Trust Adds Genuine Value – and When a Straightforward Will is Enough
For decades, including a trust in your will was a standard piece of inheritance tax planning. Most well-drafted wills did so as a matter of course, and for good reasons. The introduction of the Transferable Nil-Rate Band in October 2007, and then the Residence Nil-Rate Band in April 2017, changed the picture significantly. Many wills that contain trusts no longer need them for the original tax reason — and some are quietly costing families money they wouldn't otherwise lose.
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Modern estate planning is about being precise: using trusts where they genuinely help and not using them where they don't. This page sets out how to think about that question for your own circumstances.
What is a "Will Trust"?
A will trust is a trust that's created by your will and takes effect on your death. Rather than passing assets outright to a beneficiary, the relevant portion of your estate passes into the trust, with trustees managing the assets for the people you've chosen, on the terms you've set.
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The trust may hold a share of the family home, a sum of money, a portfolio of investments, business interests, or a combination. The trustees may have wide discretion to decide who receives what and when (a discretionary trust), or the trust may give one beneficiary a defined right — for example, the right to live in the home or receive its income — with the underlying capital passing to others later (a life interest trust).
Why Trusts Were So Widely Used Historically
Before the Transferable Nil-Rate Band was introduced in October 2007, the only reliable way for a couple to use both of their nil-rate bands was through a will trust. Each spouse's will would direct the value of their NRB into a discretionary trust on first death, rather than passing it outright to the survivor. The trust used the first spouse's NRB; the survivor still had their own NRB available for the second death. The structure — typically a Nil-Rate Band Discretionary Trust (NRBDT) — was essential planning for any couple whose joint estate exceeded a single NRB.
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Since 2007, this specific tax problem has largely gone away. The TNRB now lets the survivor's estate claim the unused proportion of the first spouse's NRB automatically, simply by ticking the box on the right form. For purely tax-driven NRBDT planning, the structure became less essential.
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But — and this is the point most online guides miss — will trusts still do many other things that the TNRB doesn't. The question isn't "are will trusts still useful?" but "for what purposes are they still useful, and do any of those apply to me?"
When a Will Trust is Still Genuinely Worth Considering
Several situations make a trust in your will valuable, and often essential, regardless of the TNRB:
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Blended Families and Second Marriages
This is the single most common modern reason. If you have children from a previous relationship and a current spouse, a simple "all to my spouse" will mean your children may receive nothing if your spouse later remarries, changes their will, or runs through your share of the wealth before they die. A life interest trust — sometimes called an Immediate Post-Death Interest (IPDI) trust — solves this: your spouse can live in the home and benefit from the assets for life, but on their death your share passes irrevocably to your children. See our Trusts for Blended Families page for the details.
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Young, Vulnerable, or Financially Inexperienced Beneficiaries
Where the people you'd be leaving wealth to are too young to manage it, have a disability, struggle with money, or might be at risk of exploitation, a trust gives you the ability to provide for them carefully — releasing funds for specific purposes, at appropriate ages, or through trustees who understand their needs. See our Trusts for Vulnerable Beneficiaries and Trusts for Minors and Grandchildren pages.
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Protection Against Future Divorce or Financial Difficulty
A beneficiary's future divorce, bankruptcy, or creditors can expose outright inheritances. A discretionary trust keeps the assets in a protected structure that gives the beneficiary the benefit of the wealth without the legal exposure of ownership.
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Bloodline Preservation
Where it matters to you that your wealth ultimately reaches your direct descendants rather than being absorbed into a new partner's family on a survivor's remarriage, a trust is one of the few mechanisms that can reliably achieve this.
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Where the Estate is Large and Complex
For higher-value estates, the £2 million Residence Nil-Rate Band taper can erode or eliminate the RNRB entirely. Will trusts can form part of the structuring that manages this risk, in combination with lifetime gifting and other planning.
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To Provide for a Charitable Legacy Alongside Family
A will trust can hold and distribute funds for charitable purposes in a structured way, often with significant inheritance tax advantages if 10% or more of the net estate is left to charity.
The Legacy NRBDT Problem - When an Older Trust May Now Be Unhelpful
This is the situation we see most often: a will drafted in the early 2000s, or even the 1990s, that contains a Nil-Rate Band Discretionary Trust. At the time, it was excellent planning. Today, it may be doing none of the good it was designed to do — and may actively be losing the family money.
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The two specific concerns are:
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Loss of the Transferable Nil-Rate Band. If the NRBDT uses the first spouse's NRB by directing assets into the trust, no unused NRB can be transferred to the survivor's estate. The TNRB is lost.
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Loss of the Residence Nil-Rate Band. Where the family home (or a share of it) passes into a discretionary trust rather than directly to children, the RNRB is generally unavailable — unless the trustees use the section 144 "appointing out" rescue within two years of death.
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For most modern couples without complicating factors, neither of these would be a problem if the will had been written today, because the TNRB and RNRB would simply be claimed. But the old will is doing something the law no longer requires it to do — and is removing two valuable allowances in the process.
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If your will, or your spouse's will, is more than ten years old and contains a nil-rate band trust, a review is one of the most consistently worthwhile pieces of planning we do. Sometimes the old trust still serves a purpose — bloodline protection, second-marriage planning — and should stay. Sometimes it serves no current purpose and should be removed. Sometimes the right answer is somewhere in between, with the trust kept but the wording modernised. The point is to find out, deliberately.
The 2027 Reforms Make This Question More Important, Not Less
For families likely to be affected by the inclusion of unused pension funds within the inheritance tax framework from April 2027, the will-and-trust question becomes more pointed. Estates that previously sat comfortably below the £2 million RNRB taper threshold may now find themselves crossing it once pension wealth is added. Older planning structures may need updating to remain efficient under the new rules. We've covered the wider planning implications in our Pension Paradigm book.
Talk It Through With Us
If you'd like a proper view of whether your will should contain a trust — or whether the trust your existing will already contains is still doing its job — we'd be glad to help.