A financial expert is urging people to ensure their vulnerable loved ones can benefit from their assets – by creating a trust for them.

Mike Jordan, whose firm Jordan Financial Management has been helping people across the West Midlanders manage their finances for more than 25 years, says that while trusts aren’t used to pass on wealth as commonly as other methods, they can be a valuable option.

Recent government statistics from November 2024 reveal that as of March that year, there were only 733,000 trusts and estates registered on the Trust Registration Service, making it an often-undervalued way to pass on assets.

But according to Mike, it’s the most vulnerable people who would have the most to gain from a trust arrangement.

Mike, who is based in Sutton Coldfield, said: “When you create your estate plan, you might have people you want to pass on wealth to who cannot manage their finances themselves.

“They may be a child, an adult with a disability, a person at risk of financial abuse or someone who has made poor financial decisions in the past.

“Whatever the reason, if you consider a loved one to be vulnerable or do not wish to pass on inheritance directly, a trust can help guarantee their financial security after you’re gone.”

A trust is a legal arrangement in which assets are managed by trustees for the benefit of one or more beneficiary. So, while your loved one may benefit from the assets, the trustee is in charge of managing them.

Mike gave an example: “If you want to pass on assets to your grandchild, you might name their parents as trustees. You could specify that money be withdrawn from the trust to cover educational costs and, once the child turns a certain age, they can take control of the remaining assets themselves.

“Or, if the beneficiary is a disabled adult, you might state the trustee is to provide them with a regular income for the rest of their life.

“As the settlor, who sets up the whole thing, you can personalise your trust so that it suits your goals and what’s best for your loved ones.”

If you are thinking about creating a trust, there are several important factors worth considering.

Firstly, there are several different types of trust, and once one is set up, it can be difficult or impossible to reverse the decision. Mike recommends seeking professional legal advice if this is something you are unsure about.

You must also consider who would act as trustee.

Mike said: “Choosing a trustee can be a difficult decision. You want someone capable of handling finances, who you can trust to act in line with your wishes and the best interest of the beneficiary.

“Fortunately, there are lots of options. You can choose more than one trustee, and decide whether you want them to make decisions together.

“You can also choose a professional, such as a solicitor or financial planner – though they would charge a fee for their services.”

Deciding how much control the trustee has is also important. If you have a clearly defined idea about how you want your assets to be used, you might set out exact time frames.

Alternatively, you may give more control to the trustee and allow them to use their judgement.

Mike added: “A trust is often just a small part of your estate plan, but it can be a brilliant, highly customisable way of passing on assets.”