Can I control what my inheritance is spent on?

We all want to support our families. But there may be circumstances where loved ones are not yet ready to manage a significant inheritance responsibly.

Receiving an inheritance is no small thing, and inheritors could potentially be getting substantial amounts. 

Amounts that can prove life-changing. 

The Times, analysing data from the Institute for Fiscal Studies (IFS) in April 2026, found that those born in the 1980s are expected to inherit about £320,000 on average over the coming years, driven by legislative changes, and the “great wealth transfer”. Those born in the 1970s could receive a windfall of £230,000, and 1960s babies may get around £150,000. 

We’re sure many parents and grandparents hope their descendants use those funds to say, get on the housing ladder, or invest for their own futures. 

But worryingly, a paper from the London School of Economics that was also quoted by the Times in May 2026, showed that inherited wealth (or at least, the cash element of wealth) can fade away within just three generations. 

As such, it could be worth thinking about your inheritance plans and the options available to you. 

Primarily, it’s possible to do this through the use of trusts. Specifically – a discretionary trust. 

A discretionary trust can be created to effectively hold assets for beneficiaries to be released under specific conditions. It can be used within a will, meaning it will not come into effect until death. 

If you create a discretionary trust, you will appoint “trustees” and leave them property or capital to distribute to beneficiaries. 

A trustee is a person who takes responsibility for managing assets that have been set aside for the benefit of someone else. They must manage those assets strictly for the benefit of the eventual beneficiaries. 

What’s important to note is that with a discretionary trust, there is no automatic right for beneficiaries to receive funds from it. Instead, the trustees have broad powers to decide how and when the assets or money is distributed. 

Evidently, it is important to pick people you can trust to be trustees. For this reason, many people may opt to pay for the services of professional trustees to adhere to their wishes. 

When establishing a discretionary trust, some key considerations will need to be addressed. This includes contingency planning and conflict management. But it also involves beneficiary considerations. 

Within the trust, you may express a preference that trustees only consider distributing funds once a beneficiary reaches a certain age or life stage (and therefore have hopefully matured somewhat). Or, funds could only be released under specific circumstances, such as when a beneficiary starts university, or is looking to purchase their first home. 

To further strengthen a discretionary trust, it can also be paired with a “Letter of wishes”. Letter of wishes are documents that can guide trustees on how they should exercise their powers, and under what circumstances. It is separate from the trust deed (which sets out how the trust works and its details), and the will.  

While a letter of wishes isn’t legally binding, it is highly influential. Trustees will be expected to read it, and consider the contents when making their decisions.  

While discretionary trusts are often used in these situations, other trust arrangements may also be suitable depending on your objectives and family circumstances.

Flexible life interest trusts could provide someone (your spouse, say) with a right to receive income, while providing the trustees with the flexibility to advance capital to other beneficiaries such as children where appropriate. With this option, trustees can adapt to your family’s circumstances over time. 

Vulnerable beneficiary trusts are designed for beneficiaries who meet HMRC’s definition of vulnerable. Here, trustees can manage finances on behalf of people who may have care needs, lack capacity, or would otherwise be unable to manage the assets independently.  

Deeds of variation can also play a part in directing inheritances after death. There may be circumstances when a beneficiary wants to redirect their inheritance to another person, which can be done with this document. One of the reasons for doing this is to move assets into a trust, in which further distributions can be controlled. 

We have simplified the basics here. While trusts can be helpful for inheritance planning, they are complicated legal arrangements. 

We can help determine if they’re right for your circumstances. Trust creation and management is not offered by Lloyds Wealth, but we can introduce you to a specialist in this area if it could be helpful. Lloyds Wealth might receive a referral fee from some of the partners we introduce. 

With planning, it could be possible to protect the wealth you've built, provide for future generations, and help ensure assets are distributed in line with your wishes.

If you’d like to discuss your options, please contact one of our financial advisers. We can begin with a free, no obligation conversation to understand if our service is right for you. There are no hidden fees or charges, and you’ll only pay if you choose to go ahead with the recommendations in your personalised financial plan.

Fees, charges and eligibility criteria apply.

This article is for information purposes only. It is not intended as advice. 

This article refers to third party sources which we believe to be true and accurate. 

Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. 

If you need will writing or Power of Attorney services, your adviser can introduce you to specialists in these areas as Lloyds Wealth do not provide these services. If you need estate administration or trust management services, your adviser can refer you to Lloyds Bank or Bank of Scotland. Certain areas of these services (for example will writing and Power of Attorney) are not regulated by the FCA and you should refer to the provider's literature for confirmation.

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