Precatory trusts

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance

Precatory trusts

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
imgtext

This guidance note explains what a ‘precatory trust’ is and what the inheritance tax, capital gains tax and other tax effects of leaving such a trust in a Will are.

Precatory trusts in Wills

A ‘precatory trust’ is when a testator makes an outright gift of property to a legatee, but also includes in the Will an unenforceable direction to the legatee to further dispose of the property in favour of others. Often the direction is expressed as a ‘wish’, ‘hope’, or ‘desire’. Since no imperative fiduciary duty falls on the legatee, as with a normal trust, the legatee is free to ignore what the testator has said and is under only a moral and unenforceable obligation to dispose of the property in accordance with the testator’s direction.

The most common form of precatory trust is one of the testator’s chattels, such as:

‘I give to Hazel Smith absolutely all of my personal chattels as defined in section 55(1)(x) of the Administration of Estates Act 1925 and without imposing any trust or binding obligation upon

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
Powered by Tolley+
  • 14 Nov 2025 16:20

Popular Articles

Company cars

Company carsIntroductionCompany cars are one of the most common taxable benefits. The rules for calculating the benefit are complex, and the reporting requirements are more onerous than most benefits. Company cars are covered by very specific legislation. Detailed guidance on each of the following

14 Jul 2020 11:15 | Produced by Tolley Read more Read more

Trade or hobby

Trade or hobbyInteraction of hobby farming rules and commercialityFarming has its own set of ‘hobby farming rules’, which historically have stated that a profit must be made every six years. This is known as ‘the five-year rule’, in that there can be five years of losses but there must be a profit

14 Jul 2020 13:50 | Produced by Tolley Read more Read more

Loans written off

Loans written offCompanies sometimes provide directors, employees or shareholders with low interest or interest-free loans either as part of the reward package or on special occasions to help the individual meet significant expenditure. The employment income implications of these loans are discussed

14 Jul 2020 12:11 | Produced by Tolley Read more Read more