Comparison · Estate Planning · 2026
Will Trust vs Discretionary Trust UK 2026: Which Estate Planning Tool?
A will trust is created on your death through the terms of your will, while a discretionary trust can be set up either during your lifetime or via your will, giving trustees flexible discretion over how assets are distributed among beneficiaries. Both can serve estate planning goals like protecting vulnerable beneficiaries or blended families, but they differ in timing, control and ongoing tax treatment, including the 10-yearly periodic charge that applies to discretionary trusts.
TL;DR - 30-Second Summary
- - Will trust: created only on death via your will, can be discretionary or fixed-interest
- - Discretionary trust: can be set up in lifetime or via will; trustees choose who benefits and by how much
- - Tax note: discretionary trusts face a 10-yearly periodic charge (up to 6%) on value above the £325,000 nil-rate band
Side by Side: Will Trust vs Discretionary Trust
| Feature | Will Trust | Discretionary Trust |
|---|---|---|
| Comes into effect | On death, via the will | Lifetime or via will |
| Distribution control | Fixed or discretionary terms as set | Trustee discretion within a class |
| Lifetime IHT charge | None (created on death) | Possible 20% charge if lifetime transfer exceeds NRB |
| 10-yearly periodic charge | Applies if structured as discretionary | Applies — up to 6% above NRB |
| Common use | Vulnerable beneficiaries, blended families | Flexible long-term family provision |
| Set up during your lifetime? | No — only takes effect on death | Yes, if set up as a lifetime trust |
What Is a Will Trust?
A will trust is written into your will and only comes into existence when you die, holding some or all of your estate for the benefit of named beneficiaries or a class of beneficiaries under the terms you specify. Common structures include a life interest trust (giving a surviving spouse the right to income or use of an asset for their lifetime, with capital passing to children afterwards) or a discretionary will trust for maximum flexibility.
Because a will trust does not exist until death, there is no lifetime Inheritance Tax charge to consider when setting it up — the assets simply form part of your estate on death, taxed under standard estate rules using the £325,000 nil-rate band and, where applicable, the £175,000 residence nil-rate band.
What Is a Discretionary Trust?
A discretionary trust gives trustees full discretion over how income and capital are distributed among a defined class of beneficiaries, rather than fixed predetermined shares. It can be set up during your lifetime (immediately using part of your nil-rate band, with a 20% lifetime charge on any excess above £325,000 transferred in) or created through your will on death.
Discretionary trusts are subject to their own ongoing Inheritance Tax regime, including a periodic charge every 10 years (up to 6% of the value above the available nil-rate band) and an exit charge when capital leaves the trust — an important ongoing administrative and tax cost to weigh against the flexibility gained.
Who Should Choose What?
- - You want the trust to take effect only on your death
- - You have vulnerable beneficiaries or a blended family to protect for
- - You want to avoid any lifetime IHT charge from setting it up now
- - You want to start passing assets down during your lifetime
- - You want maximum trustee flexibility over future distributions
- - You accept the ongoing 10-yearly periodic charge as a cost of flexibility
Trust structures involve complex, ongoing legal and tax obligations — always take advice from a solicitor and, for larger estates, a tax adviser before setting one up.