The figures from HM Revenue and Customs show a rise in the number of trust registrations in the tax year to 2025 to 121,000 – 6,000 up on the previous tax year. Mandatory registration of trusts (with the Trust Registration Service) is undoubtedly one reason for the increase.

But the recent restrictions on the availability of business and agricultural property relief; and the impending rules bringing pensions into scope on the valuation of a deceased estate for the purposes of inheritance tax have contributed to lawyers utilising trusts to help clients minimise their potential IHT liabilities.

Trusts are technical and often complex, particularly where a client’s circumstances may involve blended families, international assets, property co-ownership issues, potential care costs and so on. Structured carefully and in line with the clients’ needs and goals, trusts are an invaluable tool not to be overlooked.

It is also likely that with the rise in trusts in tax and wealth planning, there will be an increase in trusts disputes. As practitioners increasingly consider the benefits of trusts, it is important to be mindful of some of most common pitfalls for the unwary. For example:

Relying on outdated precedents – Precedent trust documents and clauses have their place, but they need to be used selectively and carefully. There is the risk of relying too heavily on precedents that could be out-of-date because of new regulations or case law, or contain errors that have not previously been spotted.

Ineffective trustee provisions – The trust documents should effectively govern the appointment, retirement and termination of trustees. Where the provisions are inadequate, trustee disputes can quickly escalate. The court emphasised that on an application for the removal of a trustee, the key test is whether the administration of the estate is being impeded; and whether the trustees’ removal is in the beneficiaries’ interests (Fernandez (2025)).

Failing to check the trust deed – A careful review of the trust deed and documents is vital before execution. A final review should take into account the clients’ circumstances and needs, and the purpose of setting up the trust. A robust final review can prevent mistakes and omissions being identified too late to avoid a trustee dispute, unexpected tax liability etc.

The rule against self-dealing – Trustees are not permitted, at common law, to benefit from their role as a trustee and, therefore, cannot be paid for acting as such. Their conduct and decision -making as trustees must not breach this principle. The rule against self-dealing enforces this, prohibiting trustees from dealing with trust property for their own benefit: clearly, it’s a conflict of interests.

If such a transaction occurs, the trustee will be in breach of trust and the transfer will be considered void. There could also be potential fraud implications and a negligence claim if the trustees fail to deal promptly with breaches by a trustee.

We are covering these issues and more in our Wills & Probate face to Face events with Professor Lesley King. For more information about our events visit here