Are Trusts Still Worth It? Why They Remain a Powerful Planning Tool

For many families, trusts have long been a cornerstone of effective wealth preservation and succession planning. Yet in recent years, the landscape has changed. Increased tax exposure, greater reporting requirements, and heightened regulatory scrutiny have left some clients wondering whether trusts remain worthwhile. Despite these developments, trusts continue to provide powerful legal and practical benefits – often unmatched by other structures.

What is a trust?

A trust is a legal arrangement where trustees hold and manage assets on behalf of beneficiaries. The “settlor” transfers assets into the trust, and trustees apply them according to the trust deed, providing structure, protection, and long‑term stewardship of family wealth.

A shifting compliance landscape

Trustees today must navigate an increasingly complex compliance landscape. The Trust Registration Service (TRS) requires most UK trusts to register key information with HMRC and keep it updated. This matters because trustees are personally responsible for ensuring the register remains accurate, and failures can lead to penalties or delays when dealing with banks, investment managers or property transactions.

The Automatic Exchange of Information (AEOI) regime – including the Common Reporting Standard – requires certain financial information about trusts to be reported to tax authorities worldwide. For trustees, this means understanding whether their trust is classed as a “financial institution” and ensuring the correct information is provided annually to avoid regulatory scrutiny.

Meanwhile, in Scotland, the Register of Persons Holding a Controlled Interest in Land (RCI) captures details of anyone who has significant influence or control over land‑owning entities, including certain trusts. For trustees of land‑holding structures, failing to comply can result in criminal penalties, making it essential to understand whether the trust falls within the regime and what disclosures are needed.

Together, these regimes reinforce the importance of trustees being organised, well‑informed, and supported in meeting their obligations. If managed properly, the compliance burden is entirely workable – and our team assists clients daily in ensuring their trusts remain fully compliant.

The enduring value of trusts

Despite a more complex compliance environment, trusts remain one of the most flexible and protective estate‑planning tools available. For many clients, the benefits significantly outweigh the administrative responsibilities.

1. Protection in succession

Trusts allow wealth to pass across generations in a controlled and thoughtful way. Instead of an outright inheritance – which may be vulnerable to divorce, bankruptcy or simply poor decision‑making – a trust can ensure assets are safeguarded for long‑term family benefit.

Trusts can also help maintain stability in family businesses or landed estates, ensuring continuity where ownership fragmentation could be detrimental.

2. Support for vulnerable beneficiaries

Where a beneficiary is young, has additional support needs, or is otherwise vulnerable, trusts provide a structure that ensures funds are managed responsibly on their behalf. Trustees can make decisions tailored to the beneficiary’s needs without jeopardising means‑tested entitlements or exposing funds to risk.

3. Flexibility for future planning

Circumstances evolve – families grow, assets change, tax regimes shift. A well‑drafted trust provides adaptability. Trustees can respond as life progresses, making decisions that preserve family wealth regardless of unexpected changes.

4. A preferential tax regime

While trusts are subject to their own tax regime, it can be advantageous. Inheritance tax charges on most lifetime trusts fall under the “relevant property” regime, meaning they face a maximum 6% charge every ten years, instead of the 40% inheritance tax that applies on an individual’s death. For many clients, this offers predictable tax exposure and facilitates long‑term planning.

So, are trusts still worth it?

Yes, trusts are still worth it. Though regulation has increased, the fundamental advantages of asset protection, succession control, and flexibility remain as compelling as ever. With appropriate guidance, trustees can meet compliance obligations confidently while families continue to benefit from one of the most valuable estate‑planning structures available.

How we can help

If you have any questions relating to the issues raised here, please contact a member of the Anderson Strathern team or Alasdair Johnstone directly.