Amy Osman, trust specialist with SA Law, explores the dynamics behind the growth in family trusts and explains where complexities can arise and how to deal with them.
The latest HMRC statistics on trusts reveal a marked increase in their use across the UK. Between 1 April 2024 and 31 March 2025, there were 121,000 new registrations, bringing the total number of active trusts to 835,000.
Trusts have often been regarded as tools reserved for the ultra-wealthy. However, these figures demonstrate that they are increasingly becoming widely recognised as practical and accessible planning tools for families seeking to protect assets and structure succession sensibly.
As their popularity grows, so too does the importance of understanding not only how trusts operate, but where complexity can arise and why careful drafting and specialist advice are essential to avoid unintended consequences.
Why more families are turning to trusts
A key driver behind the rise in trust use is intergenerational planning. Many families wish to preserve capital for the long term while still providing flexibility and support for children and grandchildren. Trusts enable assets to be ring fenced rather than transferred outright, which can be particularly valuable where beneficiaries are young or financially inexperienced.
Asset protection is also a significant consideration. Trust structures can offer resilience against divorce, bankruptcy, or financial mismanagement, and can ensure that vulnerable beneficiaries are supported.
Tax planning remains an important factor. With inheritance tax thresholds frozen until at least 2028, and anticipated changes to agricultural and business property relief and the treatment of pension funds, more estates are likely to fall within the inheritance tax net. Trusts can assist in managing exposure over time, making use of available exemptions and reliefs where structured correctly.
Where complexity commonly arises
While trusts are flexible and effective tools, certain scenarios regularly generate difficulty where planning has not been sufficiently thorough. For instance, vulnerable beneficiary trusts require particularly careful structuring. As the assets are owned by the trustees rather than the beneficiary personally, funds can be used to enhance quality of life – such as paying for specialist equipment, therapy, education, or respite care – without disqualifying them from disability benefits. The statutory criteria are technical, so careful drafting and clear trustee guidance are essential to secure the intended tax treatment and long-term protection.
Life interest trusts in blended families can be particularly sensitive. It is common for a surviving spouse or partner to receive a right to income, with capital preserved for children from a previous relationship. Tensions may arise where the trust’s primary asset is a residential property and there is no separate fund to meet ongoing expenses such as repairs or insurance. Careful drafting, including provision for maintenance funds and clear allocation of responsibilities, can significantly reduce the risk of dispute.
Periodic and exit charges must also be factored into long-term modelling, and assumptions around inheritance tax reliefs should be stress-tested against future changes in circumstances.
The importance of trustee selection and administration
In practice, difficulties often stem not from the tax structure itself but from trustee dynamics. Appointing all adult children in a blended family, selecting trustees without sufficient time or expertise, or failing to include effective removal and replacement provisions can lead to deadlock and strained relationships. Majority decision clauses, the option to appoint an independent or professional trustee, and a clearly articulated letter of wishes can provide valuable safeguards.
Ongoing compliance is also increasingly significant. Registration under HMRC’s Trust Registration Service and adherence to reporting obligations are now central aspects of trust administration. Trustees must maintain accurate records and understand their continuing duties. Trusts are not passive arrangements; they require active and informed oversight throughout their lifecycle.
Getting it right from the start
Trusts remain powerful and versatile planning tools when used appropriately. The rise in registrations reflects growing awareness, but it also increases the likelihood of arrangements being implemented without sufficient specialist input.
Early and coordinated advice from solicitors, tax advisers, and financial planners is essential. Clear objectives should be established at the outset, detailed tax analysis undertaken, and alignment ensured with wills, lasting powers of attorney, business structures, and life policies. The trust deed must be carefully drafted with appropriate powers and safeguards, trustees selected thoughtfully, and letters of wishes prepared with clarity and foresight.
When structured and administered properly, trusts can provide stability, protection, and long-term flexibility for families. The key lies in precision, planning, and professional guidance from the outset.
About the author
Amy Osman is an associate solicitor in SA Law’s wills, trusts and probate department, specialising in wills, probate, estate planning, and lasting powers of attorney. She works regularly with complex, high-value estates and has experience in administering estates and obtaining grants of representation. Her role also involves helping clients plan for the future through the preparation of wills, the drafting of trusts, and lasting powers of attorney – covering both financial matters and health and care decisions.
