When someone dies without a valid Will, they are said to have died intestate. In England and Wales, their estate is then distributed under the rules of intestacy, set out in legislation. In many cases, those rules create what are known as statutory trusts.
What is a Statutory Trust?
A statutory trust is a trust that arises automatically by law, rather than being deliberately created by a Will.
Under the intestacy rules, certain beneficiaries (most commonly children) do not receive their inheritance outright immediately. Instead, their entitlement is held on trust until specific conditions are met.
When Do Statutory Trusts Arise?
Statutory trusts commonly arise where the deceased is survived by:
- children, or
- other close family members who are entitled under the intestacy rules
The most common example is where a person dies leaving children under the age of 18.
Who Benefits Under a Statutory Trust?
Under the rules of intestacy, beneficiaries typically include:
- children (including legally adopted children), and
- their descendants if a child has already died
Each beneficiary is entitled to a share of the estate, but that share is held on statutory trust until they are legally entitled to receive it outright.
What are the Rules of Intestacy?
The Rules of Intestacy can be quite complex to understand, particularly if there are a significant number of beneficiaries. If you are married and have children, only the first £322,000 will pass to your surviving spouse, the remainder will be divided between your children and your spouse. Read more…
When Does a Beneficiary of a Statutory Trust Become Entitled?
Under a statutory trust, a beneficiary becomes absolutely entitled when they:
- reach 18 years of age, until then, their inheritance is held and managed by trustees.
Who Acts as Trustee of a Statutory Trust?
The personal representatives (usually the administrators of the estate) act as trustees of the statutory trust. They are responsible for:
- safeguarding the assets
- managing investments
- applying income or capital for the beneficiary’s benefit where appropriate
This role carries legal duties and responsibilities.
What Can the Trustees of a Statutory Trust Do With the Funds?
Trustees have limited statutory powers, including the ability to:
- use income or capital for a child’s maintenance, education or benefit, and
- invest the funds until the beneficiary becomes entitled
However, the flexibility is far more restricted than if a tailored trust had been created by a Will.
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Why Can Statutory Trusts Be Problematic?
Statutory trusts are one-size-fits-all and may not reflect what the deceased would have wanted. Common issues include:
- beneficiaries inheriting outright at 18, regardless of maturity
- no scope to protect assets from divorce, creditors or poor decision-making
- no ability to benefit stepchildren or unmarried partners
- increased administrative burden for trustees
How Can You Avoid a Statutory Trust Being Invoked?
The only way to avoid statutory trusts arising on death is to have a properly drafted Will. A Will allows you to:
- choose who inherits
- decide when and how beneficiaries receive their inheritance
- appoint trustees of your choosing
- include flexible trust arrangements where appropriate
Contact our Wills & Probate Solicitors for Advice
Understanding statutory trusts highlights why estate planning is so important and why dying without a Will can leave loved ones with outcomes you never intended.
At Thornton Jones Solicitors our private client team can assist you in preparing a Will that reflects your wishes and will avoid unintended consequences. Contact our friendly and professional team today for more information.
If you need assistance or advice you can contact our team today on 01924 290 029 or contact us using our online enquiry form.
Statutory Trust FAQs
A statutory trust arises automatically under the rules of intestacy when someone dies without a valid Will. In contrast, a trust created by a Will is deliberately set up by the person who has died, allowing them to control how and when beneficiaries receive their inheritance.
Under a statutory trust, children usually become entitled to their inheritance when they reach 18. Until then, their share of the estate is held and managed by trustees on their behalf.
Statutory trusts are automatically created by law under the rules of intestacy, most commonly to manage the inheritance of minors. While you cannot remove the legal effect once the trust arises, there are ways to manage or conclude it. For example, the trust automatically ends when a beneficiary reaches 18, giving them full entitlement to their share. Trustees may also, in certain cases, convert the statutory trust into a bare trust to give the beneficiary more control over the assets.
The most effective way to avoid a statutory trust entirely is to make a valid Will. By doing so, you can specify who inherits, when they inherit, and under what conditions, ensuring your estate is distributed according to your wishes rather than default intestacy rules. Proper estate planning also reduces administrative burdens and helps protect assets from unintended risks.
The content of this blog post is for information only and does not constitute formal legal advice and should not be relied upon as advice. Thornton Jones Solicitors Limited accepts no liability for any such reliance upon this content. Where the post includes links to external websites, Thornton Jones Solicitors Limited accepts no responsibility for the content of such sites. Any link to a third-party website should not be construed as endorsement by Thornton Jones Solicitors Limited of any content, products or services which are outside our direct control.
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