Trust Case Studies: Examples of Different Trusts and Their Costs
Estate planning can feel overwhelming, especially when you’re trying to decide whether a trust is the right choice for your family. To make things easier, here are four real-life style trust case studies, showing how different trusts work, what they cost, and how they benefit families.
If you are still weighing up the role of wills, see our guide: Do You Really Need a Will in England and Wales? 5 Scenarios.
1. Small Family Discretionary Trust (£100,000)
Scenario
Mr. and Mrs. Smith want to support their two children and future grandchildren. They create a family trust worth £100,000. Trustees manage distributions for education, healthcare, and other welfare needs.
Setup Costs
- Legal fees: £1,500 – £2,500
- Accountant advice on tax planning: £500 – £1,000
Ongoing Costs
- Trustee fees: £500 – £1,000
- Accounting & compliance: £500 – £1,000
Tax Considerations
- Subject to the relevant property regime, but 10-year charges minimal.
- Income over £1,000 taxed at 45%.
Benefits
- Keeps family wealth private.
- Trustees control how and when distributions are made.
- Protects assets from creditors or divorce claims.
Practical Outcome
Funds can be released for children’s education without going through probate. Parents maintain control over timing and use of money.
2. Medium-Sized Disabled Beneficiary Trust (£500,000)
Scenario
Mrs. Johnson sets up a £500,000 disabled person’s trust for her adult son. This structure provides long-term financial security without affecting means-tested benefits.
Setup Costs
- Legal fees: £2,500 – £4,000
- Specialist tax consultation: £1,000 – £2,000
Ongoing Costs
- Trustee fees: £2,000 – £3,500 annually
- Accounting & compliance: £1,500 – £2,500 annually
Tax Considerations
- Income taxed at standard trust rates.
- Capital gains: 28% (property) or 20% (other assets).
- Certain exemptions available for disabled trusts.
Benefits
- Provides consistent financial support.
- Preserves access to government benefits.
- Professional trustees ensure compliance.
Practical Outcome
Trustees pay for housing, medical care, and lifestyle needs. The son keeps access to government support while benefiting from managed funds.
3. Large High-Net-Worth Discretionary Trust (£1,000,000+)
Scenario
Entrepreneur Mr. Thompson places £1,000,000+ into a discretionary trust for children, grandchildren, and future generations, aiming to reduce inheritance tax exposure.
Setup Costs
- Complex trust deed: £5,000 – £10,000
- Tax and financial planning: £3,000 – £5,000
Ongoing Costs
- Corporate trustee fees: £5,000 – £10,000 annually
- Accounting & reporting: £2,000 – £5,000 annually
Tax Considerations
- Falls under the relevant property regime.
- 10-year periodic charge: 6% above the nil-rate band.
- Exit charges when distributing capital.
For a deeper comparison of how trusts can reduce inheritance tax compared to wills, read: Trusts vs. Wills – Why a Trust May Be the Smarter Choice.
Benefits
- Protects multi-generational wealth.
- Shields assets from disputes or divorce claims.
- Provides flexibility for trustees.
Practical Outcome
Wealth is preserved across generations, covering education, investments, and lifestyle support, while reducing inheritance tax liabilities.
4. Charitable Trust (£750,000)
Scenario
The Martin family creates a charitable trust with £750,000, supporting good causes while also receiving tax relief.
Setup Costs
- Legal drafting: £3,000 – £6,000
- Specialist charity tax advice: £1,500 – £3,000
Ongoing Costs
- Trustee fees: £2,000 – £4,000 annually
- Accounting & Charity Commission reports: £1,500 – £3,000 annually
Tax Considerations
- Eligible for charitable donation relief.
- Income used for charity may be tax-exempt.
Benefits
- Long-term funding for charities.
- Combines philanthropy with estate planning.
- Reduces inheritance tax burden.
Practical Outcome
The family supports charities while also benefiting from tax advantages. Assets pass to chosen charities after serving initial family needs.
Conclusion
These trust case studies show how trusts vary in setup, costs, and outcomes. Whether it’s a small family trust, a specialised disabled person’s trust, or a large discretionary or charitable trust, each offers unique benefits. For many families, trusts provide flexibility, privacy, and tax efficiency that wills alone cannot achieve.Interested in real-life will scenarios? Explore our companion article: Do You Really Need a Will? 5 Real-Life Stories That Show Why It Matters.
Notice: All names in these examples have been changed to protect confidentiality.
Need help? At Express Law Solutions, we review, draft, and negotiate contracts to ensure they’re fair, clear, and enforceable.
Contact Us: +44 7482 928014 | expresslawsolutions@gmail.com or Book A Conslultation
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Sources
- MP Estate Planning – How Much to Set Up a Trust Fund in the UK
- Blackstone Solicitors – Costs Involved in Setting Up a Discretionary Trust
- Gov.uk – Trusts, Settlements, and Estates Manual (TSEM)
- Gov.uk – Trust Management Expenses Helpsheet HS392
- AMS Housing Group – How Much Does it Cost to Put Your House in a Trust UK
- Assets Publishing Service – HMRC HS392 Table
