Difference Between a Will and a Trust UK (2026): Which Do You Need?

A will and a trust are fundamentally different legal instruments that serve different purposes, though they can be used together: A WILL is a legal document by which a person (testator) sets out instructions for the distribution of their estate after death. Key features: (1) Takes effect ONLY on death — it has no legal effect during the testator's lifetime; (2) Must comply with Wills Act 1837 s.9 formal requirements (in writing; signed by testator; in presence of two simultaneous witnesses; each witness signs); (3) Can be changed or revoked at any time before death (revoked by marriage under WA 1837 s.18; revoked by destruction under s.20; superseded by a new will); (4) Becomes a PUBLIC document on probate — anyone can search the Probate Registry and download a copy of a proved will; (5) Deals with the 'estate' — all assets belonging to the testator alone at death. Cannot override joint tenancy survivorship; cannot override pension expression of wishes; cannot override trust assets already held on trust; (6) Appoints an executor to carry out instructions and, crucially, the ONLY way to appoint a guardian for minor children under CA 1989 s.5. A TRUST is a legal arrangement where assets are held by one person (the trustee) for the benefit of others (the beneficiaries) according to the rules of the trust. Key features: (1) Can exist DURING LIFETIME (a 'lifetime trust' or 'inter vivos trust') OR can be created within a will to take effect on death (a 'testamentary trust'). A testamentary trust is a trust created by and contained within a will; (2) Once validly constituted, a trust is legally binding — the trustees must follow the trust rules and cannot use the assets for personal benefit; (3) A trust is PRIVATE — unlike a will, a trust deed or deed of settlement is not a public document; (4) Trusts do not go through probate — assets held in a trust on the settlor's death are NOT part of the estate for probate purposes; (5) Trusts have their own tax framework: income tax, CGT, and IHT charges may apply (periodic/exit charges for discretionary trusts under IHTA 1984 ss.58-74).

A testamentary trust is a trust created within a will. It does not exist during the testator's lifetime — it only comes into existence on the testator's death. The will creates the trust structure; when the testator dies, the executor transfers the specified assets into the trust and the trustees take over management. Common testamentary trusts in England and Wales: (1) Bereaved Minor's Trust (IHTA 1984 s.71A): holds assets for a child (under 18) who has lost a parent or step-parent. The trust MUST vest at 18 — the child receives the assets outright. IHT-free while assets are in the trust (no periodic or exit charge). Income and capital can be used for the child's maintenance and education (TA 1925 ss.31-32); (2) Age-25 Trust (IHTA 1984 s.71D): allows a testator to defer the child's absolute entitlement until up to age 25. Between 18 and 25, a modest exit charge applies (maximum 4.2%). Useful where the testator does not want a child to receive a significant inheritance at 18; (3) Discretionary Trust Will: assets held by trustees with discretion about who among a class of beneficiaries receives income and capital, and in what proportions. Useful for flexible family provision, protecting vulnerable beneficiaries, or protecting against future creditors of beneficiaries. Subject to IHT periodic and exit charges; (4) Life Interest Trust (or 'interest in possession trust'): provides one beneficiary with income for life, with the capital passing to another set of beneficiaries on the life tenant's death. Used in second marriage situations to protect children of the first marriage while providing for the surviving spouse; (5) Disabled Person's Trust (IHTA 1984 s.89): favourable IHT and CGT treatment for trusts where the principal beneficiary is a disabled person. Creating a testamentary trust requires proper drafting — particularly ensuring the trust has its own registered trustees, adequate trustee powers (including TA 2000 investment powers), and correctly identifies the trust property and beneficiaries.

A lifetime trust (sometimes called an inter vivos trust, a living trust, or a settlement) is created and becomes effective during the settlor's lifetime — as opposed to a testamentary trust which only comes into existence on death. Common reasons to set up a lifetime trust in England and Wales: (1) Protecting assets for future beneficiaries: parents may want to put a sum of money into trust for grandchildren. The assets are managed by trustees and held for the grandchildren according to the trust rules. The settlor does not include these assets in their will (they are already in the trust); (2) Asset protection from care home fees: controversial and legally risky — putting your home in trust to avoid care home fees is a known tactic but is typically treated by local authorities as 'deliberate deprivation of assets' under the Care Act 2014. HMRC and local authorities may look through the transaction if the main purpose was avoidance; (3) Business succession: business property held in a family trust can pass control to chosen individuals on the settlor's incapacity or death, without going through probate; (4) Trusts for disabled family members: a discretionary trust for a person with disabilities can qualify for favourable IHTA 1984 s.89 treatment if structured correctly; (5) Privacy: a lifetime trust does not become a public document on death (unlike a will), so the distribution of trust assets remains confidential; (6) Avoiding probate delay: assets held in a lifetime trust are not part of the estate for probate purposes — they can be accessed by beneficiaries without waiting for a Grant. Important tax considerations: (1) Transferring assets into a lifetime discretionary trust is a 'chargeable lifetime transfer' (CLT) for IHT purposes — subject to 20% entry charge if the total exceeds the NRB; (2) Periodic charges (every 10 years) and exit charges apply to discretionary trusts; (3) CGT may crystallise on the transfer if the assets have grown in value (some holdover relief available under TCGA 1992 s.165); (4) For most families, a well-drafted will with testamentary trust provisions is simpler and more cost-effective than a lifetime trust.

Two separate questions — probate and IHT: DO TRUSTS AVOID PROBATE? Largely yes — assets already held in a trust at the date of death do NOT form part of the testator's estate for probate purposes. They are held by the trustees and can be distributed according to the trust rules without waiting for a Grant of Probate. This is one reason why some families use lifetime trusts for assets they want beneficiaries to be able to access quickly after death (without waiting 6-12 months for probate). However: (1) Testamentary trusts require probate first — the will must be proved before assets can be transferred into the testamentary trust; (2) Placing all assets in a lifetime trust to avoid probate entirely is possible but complex, expensive, and creates ongoing administration costs. Most families are better served by a will with named executors and adequate powers; DO TRUSTS AVOID INHERITANCE TAX? This is more nuanced: (1) Lifetime trusts: transferring assets into a discretionary trust does NOT exempt them from IHT — there is a 20% entry charge (CLT) on transfers above the NRB; 10-yearly periodic charges; exit charges on distribution. The assets leave your estate after 7 years but the trust itself faces its own IHT charges; (2) Testamentary trusts: the assets in a testamentary trust form part of the deceased's estate for IHT purposes at death. They are charged to IHT at the rate applicable at death. However, certain testamentary trusts attract favourable IHT treatment: bereaved minor trusts s.71A (IHT-free); age-25 trusts s.71D (no charge under 18; modest charge 18-25); disabled person's trusts s.89 (treated as if beneficial owner); interest in possession trusts (assets in estate of life tenant); (3) Life insurance in trust: this is the most effective way to use a trust for IHT purposes. A life insurance policy written in trust is NOT part of the estate — the payout goes directly to the trust beneficiaries, outside the estate, immediately on death, without probate. (4) The conclusion: trusts do not generally avoid IHT — they simply change the timing and structure of any IHT charges.

WHO NEEDS A WILL: Almost every adult in England and Wales needs a will. Key situations: cohabiting (partner inherits nothing without a will); parents with minor children (guardian appointment CA 1989 s.5 requires a will — there is no other mechanism); anyone with assets they want to control on death; anyone who wants to reduce IHT on their estate. A basic will from WillSafe UK costs from £35 and protects against the default intestacy outcome. WHO NEEDS A TESTAMENTARY TRUST IN THEIR WILL: (1) Parents of minor children: a bereaved minor trust s.71A or age-25 trust s.71D in the will prevents an 18-year-old from receiving a large inheritance without safeguards; (2) Blended families / second marriages: a life interest trust in the will protects children of the first marriage while providing for the surviving spouse; (3) Vulnerable beneficiaries: a disabled person or a person with addiction issues may need a discretionary testamentary trust for protection; (4) Anyone concerned about a beneficiary's financial position (debt, bankruptcy risk): a discretionary trust protects the assets from creditors. WHO NEEDS A LIFETIME TRUST: (1) Substantial assets where the settlor wants to start the 7-year IHT clock running now on those assets; (2) Business succession planning where control needs to transfer during the settlor's lifetime; (3) Disabled family members needing ongoing structured support; (4) Privacy requirements where asset distribution should not be public. WHO NEEDS BOTH: Most people with significant assets or complex family situations benefit from both — a will to deal with the estate on death (including any testamentary trusts), and potentially a lifetime trust for specific assets. For most people with straightforward circumstances (estate under £500,000; standard family), a well-drafted will with appropriate testamentary trust provisions provides everything needed. Complex situations (second marriages; large estates; business interests; vulnerable beneficiaries) may warrant both documents.