Perspectives · Estate
Five questions before you fund the next generation’s trust
September 2026 · SUI Securities
Funding a trust is one of the few financial decisions that is hard to undo. The paperwork is the easy part. What matters is agreeing why the money exists, who controls it and how it will be looked after for the decades it may sit there. These are the five questions we work through with families before any money moves.
01
What is the money actually for?
A trust without a clear purpose drifts. Decide whether the money is for education, a first home, a business start, care in later life, or simply a safety net, and write that down before anything is funded. The purpose shapes how the money should be invested, how much risk is sensible and when it can be spent.
02
Who decides, and who benefits?
The people who benefit from a trust are often not the people who control it. Name trustees who understand the purpose, set out how decisions are made, and check that the trust deed gives them the powers they will actually need. Where children are beneficiaries, agree early who speaks for them until they can speak for themselves.
03
Have you used the tax allowances that expire?
Gifts made while you are alive are usually more efficient than transfers on death, and the annual exemption and normal expenditure rules are use-it-or-lose-it. Large gifts can also start the seven-year clock on inheritance tax, so timing matters. Take advice on your own position before funding, because the order of the gifts can change the outcome.
04
Can the trust afford the running costs?
Trustees face accountancy, legal and administration costs every year, plus a tax return even when there is little activity. Small trusts can be eaten by fees. Check that the income the trust produces covers its own running costs, and keep the structure as simple as the purpose allows.
05
What happens when circumstances change?
Trusts are long arrangements, and families change. Build in a review: on a fixed date each year, and whenever a beneficiary marries, divorces, dies or needs capital sooner than planned. A short written review note keeps trustees accountable and makes later decisions easier to explain.
A short checklist
- Written statement of the trust purpose, agreed with the trustees
- Deed reviewed by a solicitor who knows your family situation
- Investment approach matched to when the money will be spent
- Annual costs compared with the income the trust produces
- Gifts recorded with dates, so reliefs are not lost
- A diary note for the yearly review, and after any family change
This article is general information, not tax or legal advice. Trust taxation depends on individual circumstances and can change.
Common questions
How much can I put into a trust without paying inheritance tax?
Each person can normally give away £325,000 in total before inheritance tax applies on death, and larger gifts usually fall out of the estate after seven years. Gifts of up to £3,000 a year are exempt, as is regular giving out of income. The order and timing of gifts change the result, so take advice on your own position first.
Do we need a solicitor to set up a trust?
Yes, for anything beyond the simplest arrangement. A trust deed has to name the beneficiaries, trustees and powers correctly, and mistakes are expensive to unpick later. A solicitor who knows your family situation should draft or at least review it.
How much does it cost to run a trust each year?
Expect accountancy, legal and administration costs, plus a tax return even in quiet years. Small trusts can be eaten by fees, so it is worth checking that the income the trust produces covers its own running costs before funding it.
Can the trust be changed after it is set up?
Sometimes, but only within the powers in the deed and with the right consents. Trustees can usually make administrative changes, while changing beneficiaries is much harder. Build in a yearly review, and review again whenever a beneficiary marries, divorces, dies or needs capital sooner than planned.
Talk it through
If you are weighing up a trust for the next generation, we can walk through these questions with you. A partner replies within five business days.
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