Time To Act is Now with 16 Trusts to Protect Hard Earned or Inherited Wealth
Published / Last Updated on 16/01/2026
This is not a political statement. We do not care whether your politics are Red, Blue, Purple, Green or Yellow. These are statements of facts about the UK’s finances, demographics and choices you have for your wealth, be it hard earned or inherited.
According to Google AI today
- The UK's working-age population (16-64) is around 43.36 million as of late 2025.
- Roughly 34.2 million people in work and
- Around 10 million working-age adults claiming benefits.
- The population is ageing quickly
- In 2021, 18.6% of UK population were aged 65+
- This is increasing currently at a rate of 1% every 5 years.
- By 2072, is it forecast that 27% of the population will be 65+.
- Currently 22% of the population are under age 18.
- This means very say by 2050,
- Half of the population will either be children or over 65 and
- Half will be of working age but
- 10m, roughly a third of working age adults claim benefits.
- This equates to roughly 35 million people working, contributing to society and paying for 50 million people (children and over 65s) and with AI it could be even less people working.
No wonder the % tax take by the Treasury is currently the highest it has been since World War II (and we are not even at war …. yet). It is going to get even larger!
- Inheritance tax receipts set new records every month.
- Unused pensions funds will form part of our estates for IHT from April 2027 meaning even more IHT.
- Capital gains tax allowance has shrunk to just £3,000 pa. Capital gain tax rates will likely increase in the future.
- New and higher Dividend Income Tax, Savings Income Tax and Property Income Tax start in 2026 and 2027.
If you are a true socialist and want significant elements of your wealth to go to the state for the benefit of all, then take no action, we have no problem at all with your wishes, it is your money.
If you want your hard-earned wealth or hard saved wealth to be protected from taxation today or protected for future generations (as the super wealthy already do), then it is time to act now!
19 Videos/Articles with 16 Trusts That Can Help Most People Protect Wealth (today or for future generations):
The Basic Trusts:
Origin and Introduction to Trusts: Origin of Trusts
Video explains the origins of trusts and introduces some basic terms such as settlor, trustee, beneficiary and reasons for using a trust.
Absolute or Bare Trust: Bare Trust
A Bare Trust or Absolute Trust cannot be changed once set, which may prove beneficial for inheritance tax after 7 years. When to use a bare trust, who the beneficiaries are and more.
Flexible Interest in Possession Trust: Interest in Possession
A trust that allows you to change beneficiaries in the future if you want to offer ‘interest in possession’ (you have a football squad and you select the team from the squad), after tax changes in 2006, 2008 and 2022, no taxes when below IHT nil rate band limits but may suffer a small tax charge every 10yrs. No so popular now, but still useful if you want the ability to change beneficiaries e.g., you change beneficiaries or their share because you have given one child more than another during life.
Discretionary Trust: Interest in Possession
You define who you would like to benefit from the trust e.g. “The Direct Bloodline Descendants of John Smith”, both your children and your future generations can benefit from the trust for the next 125 years. These monies do not form part of future generations estates, as the trustees have discretion as to who they can pay money to at any time, and are therefore are protected from future inheritance taxes on each generation’s death as well as divorce and creditors but may suffer a small tax charge every 10yrs if they exceed IHT nil rate band values available at the time. This type of trust is becoming ever more popular.
Vulnerable Person Trust: Vulnerable People
Tax privileged and tax-free trusts for vulnerable people, the disabled, personal injury compensation and a bereaved child. A must if you are or you have loved ones that fall into these categories.
Other Common Trusts:
Life Insurance Trust: Insurance Trust
Put your life insurance policy in a simple trust to get money to loved ones immediately, without the need to wait for probate and avoid inheritance tax on the sum insured.
Life and Critical Illness Insurance Split Trust: Split Trust
A split trust meaning if you die, the life insurance pays out on trust to loved ones immediately, without the need to wait for probate and avoid inheritance tax on the sum insured or if you have a serious illness, the sum insured is paid out to you.
Bereaved Adult Child Trust 18 to 25 Trust: 18 to 25 Trust
Money is left in your Will to a child (below 18 or over 18) but you do not want them to control the money until they are older, say not at 18 but say at age 21,23 or 25. This may suffer a small tax charge if values exceed IHT nil rate band available at the time, but at least they will not have ‘blown it’ all at age 18.
Will Trust and Nil Rate Band Trust: Will Trust
We insert a trust clause in your Will, to create a Will Trust on your death to protect your investments, usually up to inheritance tax nil rate band £325,000 from future means tests of survivors and to ensure loved ones inherit your hard earning money e.g., on 2nd death. Your surviving spouse, whilst not a beneficiary, can borrow money from the trust, meaning they have not lost access to your capital and it then creates a debt on their estate on 2nd death, meaning their IHT bill may be lower.
Property Life Interest Trust: Asset Protection Will Trusts
We insert a trust clause in your Will, to create a Property Life Interest Trust on your death to protect your share of you property (main home or investment property), usually up to inheritance tax nil rate band £325,000 and residential nil rate band £175,000, total £500,000, from future means tests of survivors and to ensure loved ones inherit your share of the property e.g., on 2nd death. Your surviving spouse, whilst not a beneficiary, can still live in and enjoy the whole of the main home for the rest of their life even though half is held in trust e.g. for children, meaning they have not lost access to the property.
Investment Loan Trust: IHT Loan Trust
You keep access to all your investment capital built up during your lifetime but protect all future growth from 40% inheritance tax by setting up a trust and lending your money to the trust. The trust then invests the money with all growth outside your estate, but as you have only loaned your money to the trust, you can get your original capital back gradually or on demand at any time, as you see fit
Discounted Gift Trust: IHT Discounted Gift
You gift your capital to the trust but you still receive income or growth from your investments yet the value included in your estate (on day 1) for inheritance taxes may be discounted discounted immediately by say 50% i.e., the gift for IHT is valued at £100,000 as you have reserved the income and growth at say 5% pa for yourself.. E.g., Your gift £200,000 to a Discounted Gift Trust, you receive an income of 5% pa and then in 5 years time, you die. Let’s say the value of the investment at the time of death, after your income of £25,000 has been deducted, has grown to £210,000. Your loved ones inherit £210,000, but the value included in your estate for inheritance tax is still £100,000. You have more than halved the IHT bill in this example.
Lesser Known but Extremely Useful Trusts:
Bank of Mum and Dad Property Deposit Trust: Child Property Deposit Trust
Help your child on the property ladder by protecting the deposit you gift to your child in a trust from creditors, divorce or splitting with a partner.
Holdover Relief Trust: Family Gift Holdover Relief Trust
A Holdover Relief Trust is set up in life and is an effective tool to make gifts of assets that defer, potentially for many years, any capital gains tax that may be payable on the transfer of assets/property to others until the future disposal/sale many years down the line.
Probate Trust: Immediate Access Probate Trust
A probate trust is set up in life (not on death via your Will) to give your family immediate access to personally owned assets and money on death rather than waiting for say 6-12 months for probate to be granted. It may even them immediate access to funds to pay any IHT quickly so that you probate for all other assets and wealth can be granted quickly.
Disabled Person’s Interest Trust: AA or DLA DPI Trust
DPI trusts are discretionary trusts that have full CGT allowances, normal income taxes and no 10-year IHT periodic charge and are ringfenced from means tested benefits as well as wealth passed on to future generations with IHT protection built in.
Pension Fund ‘By Pass’ Trust: By-Pass Trust
Most pensions are already in a Master Trust, this used to mean that as it was already a trust, it did not form part of your estate on death and therefore was IHT free. Even though a trust, from April 2027, unused pension funds will be subject to IHT on 1st death (if unmarried) or on 2nd death of the surviving spouse/civil. By using a ‘By Pass Trust’, sometimes known as a ‘Spousal By Pass Trust’, you can put the death benefits of your pension fund in a discretionary trust on death. Whilst this may have some IHT liability on 1st death, the value in the trust then remains outside the estates of subsequent generations and therefore free of IHT on future generations death as well as protection of future generations from divorce or creditors. The trust may suffer a small tax charge every 10yrs if values exceed the IHT nil rate band values at the time, but this may be insignificant when compared to future generational IHT savings and protection from divorce/creditor settlements.
Inheritance tax is the only tax that you can legally mitigate, i.e., take action to reduce it. The use of trusts may protect assets from inheritance taxes, divorce, creditors and means testing but may also reduce the value of estates on death to avoid the need for full IHT 400 submissions and move to the simple estates process and even remove the need for probate.
