Setting Up a Trust for Grandchildren

Setting up a trust for grandchildren means placing money, investments or other assets with trustees, who hold and manage them for the grandchildren under terms you set. It is a way to pass wealth down a generation while keeping some control over when and how the children receive it.

Many grandparents choose a trust so that a gift is looked after until a child is old enough to handle it, or is released in stages. This guide explains the common trust types, how to set one up, who acts as trustee, and how tax and gifting fit in. It sits alongside our wider Trusts Explained guide and our estate planning guide. Figures are current as at July 2026 and are subject to change.

Why grandparents set up trusts

Grandparents often use a trust because an outright gift to a young child gives no control over how the money is used or when it is spent. A trust lets trustees hold assets until a chosen age or event, help with school fees or a deposit, and provide for several grandchildren fairly. It can also form part of wider inheritance tax planning, depending on circumstances.

Timing. A trust can delay full access until a grandchild is older, rather than at 18.
Fairness. Trustees can balance the needs of several grandchildren, including any not yet born.
Protection of intent. The terms guide how funds are used, for example for education or a first home.
Tax. Gifts into trust may, depending on circumstances, form part of planning around a future inheritance tax bill.

Which type of trust suits grandchildren?

The two most common choices for grandchildren are bare trusts and discretionary trusts, and they behave very differently. A bare trust is simple and the grandchild is fixed as the beneficiary from the outset; a discretionary trust gives trustees flexibility over who benefits and when. The right structure depends on your aims, the ages involved, and how much control you want to keep.

Feature	Bare trust	Discretionary trust
Who benefits	A named grandchild, fixed from the start	A class of beneficiaries, chosen by trustees over time
Access to funds	Grandchild is entitled at 18 (E&W) or 16 (Scotland)	Trustees decide if, when and how much is paid out
Flexibility	Low; the gift is locked to that child	High; can cover unborn or future grandchildren
Complexity and cost	Generally simpler and cheaper to run	More complex, with its own tax treatment

Trust types and the age of entitlement above are drawn from gov.uk/trusts-taxes, as at July 2026 and subject to change. For a fuller explanation of each structure, see our note on bare trusts.

A worked example (illustration only). A grandmother wants to help her granddaughter, aged 10, towards university. She sets up a bare trust and pays in £2,000, using part of her £3,000 annual gift exemption, so the gift is immediately outside her estate for inheritance tax (gov.uk, as at July 2026, subject to change). The trustees invest the money. Because it is a bare trust, the granddaughter becomes entitled to the whole fund at 18 in England and Wales, or 16 in Scotland (gov.uk, as at July 2026, subject to change). Change the amounts, the trust type or the ages and the position changes, so this is general information rather than a calculation for any real family.

Trusts for grandchildren in Scotland and Northern Ireland

This guide describes the law of England and Wales, and there are differences elsewhere in the UK. In Scotland a young person generally has legal capacity from 16, so a grandchild under a bare trust can usually claim the assets at 16 rather than 18 (gov.uk, as at July 2026, subject to change), and Scotland has its own trust and succession law. Northern Ireland has a separate but broadly similar system to England and Wales. Where a trust or family touches more than one UK nation, it can be worth taking advice in each.

Frequently asked questions

What is the best type of trust for grandchildren?

There is no single best option; it depends on your aims. Many grandparents choose a bare trust for simplicity, where a named grandchild is entitled to the assets at 18 in England and Wales or 16 in Scotland (gov.uk, as at July 2026, subject to change). Others prefer a discretionary trust for flexibility over timing and future grandchildren. It can be worth discussing both with a qualified professional.

At what age does a grandchild get money from a bare trust?

Under a bare trust a grandchild generally becomes entitled to all of the capital and income at 18 in England and Wales, or 16 in Scotland, and can ask the trustees for it at that point (gov.uk, types of trust, as at July 2026, subject to change). If you want to delay full access beyond that age, a discretionary trust is one option some consider instead.

How much can grandparents gift into a trust tax-free?

Each grandparent has an annual exemption of £3,000 of gifts a tax year, plus small gifts of up to £250 per person, and up to £2,500 as a wedding gift to a grandchild (gov.uk, rules on giving gifts, as at July 2026, subject to change). Larger gifts may still leave the estate if the giver survives seven years, depending on circumstances.

Do I need a solicitor to set up a trust for grandchildren?

Not in every case, but trust wording and tax treatment are easy to get wrong. Bare trusts can be relatively simple, while discretionary trusts and larger gifts often involve a solicitor, a STEP practitioner or an accountant. Because errors can be costly and hard to undo, many people choose to take professional advice before a trust is set up.

Does a trust for grandchildren need to be registered?

Usually, yes. Most UK trusts must be registered on HMRC's Trust Registration Service, generally within 90 days of the trust being created (gov.uk, register a trust as a trustee, as at July 2026, subject to change). A few limited categories are excluded. Trustees are responsible for registration, so it can be worth confirming the position when the trust is set up.

Can a trust include grandchildren not yet born?

A discretionary trust can. It uses a class of beneficiaries, so trustees can benefit grandchildren who are not yet born or named, which many grandparents find useful for a growing family. A bare trust cannot, because it fixes a named grandchild as the owner from the outset. The choice depends on how flexible you want the trust to be.

About Fairchild Oldfield

The Fairchild Oldfield team brings together estate planning, tax, independent financial advice and client care, working with families across England and Wales.

Fairchild Oldfield are estate planning specialists and will writers, not a firm of solicitors. This article is general information based on practical experience, not legal, tax or financial advice.

Important: This article is general information only and is not legal, tax or financial advice. Reading it does not create a professional relationship. It is based on the law of England and Wales, and other UK jurisdictions may differ. Figures and rules are current as at July 2026 and are subject to change. Before acting, many people choose to seek advice from a suitably qualified professional, such as a solicitor, a STEP practitioner, an accountant, or an FCA-authorised financial adviser, who can consider your individual circumstances.