Mixed Trusts
Mixed Trust Structures – Combining Flexibility, Control, and Certainty
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A Mixed Trust is not a statutory trust type, but a planning architecture: a deliberately designed arrangement in which two or more different legal trust structures are used together to achieve outcomes that no single trust could achieve on its own.
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Mixed trusts exist because real lives are complex. Different assets, different beneficiaries, and different risks often require different legal tools, even though the planning objective feels like a single problem to the client.
Why a Single Trust Is Often Not Enough
Each trust type has strengths and limitations:
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Discretionary Trusts offer flexibility, but limited certainty
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Interest in Possession Trusts offer certainty, but reduced flexibility
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Bare Trusts offer simplicity, but no protection
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Purpose or specialist trusts solve narrow problems, but not broad ones
When clients need flexibility and certainty, or protection and usability, planners often combine trust types into a coordinated structure.
That coordinated structure is what we refer to as a Mixed Trust.
How Mixed Trusts Work in Practice
A Mixed Trust arrangement typically:
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Uses different trusts for different “layers” of value or function
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Is implemented as a single planning exercise
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Is presented to the client as one solution, even though multiple trusts are involved
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Is governed by a unified strategy and supporting documentation
The trusts do not operate independently in a vacuum; they are designed to interlock.
Example 1 – Family Asset Protection Trust (FAPT)
A Family Asset Protection Trust is a classic example of a mixed trust structure.
It typically combines:
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A Discretionary Trust up to the Nil Rate Band, providing flexibility and long-term protection
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Additional trusts (often further discretionary or life-interest structures) to deal with value above the NRB
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Reserved lifetime rights to allow continued occupation and control
The result is a single, coherent solution that addresses sideways disinheritance, succession control, and long-term asset protection—without disrupting day-to-day life.
No single trust could deliver all of these outcomes on its own.
Example 2 – Blended Family Succession Trust
Where families include children from different relationships, mixed trust structures are frequently used to balance competing needs.
A typical structure may combine:
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An Interest in Possession Trust to provide a surviving spouse or partner with lifetime income or occupation rights
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A Discretionary Trust for children, allowing trustees to respond to differing needs, ages, and circumstances
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A Letter of Wishes to guide trustees without locking in rigid outcomes
This combination ensures immediate provision for the survivor while preserving capital for the next generation—something neither trust could achieve alone.
Example 3 – Business Continuity & Family Benefit Trust
For business owners, mixed trusts are often used to separate business stability from family benefit.
A structure may involve:
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A Shareholding Discretionary Trust holding voting or control shares to preserve continuity
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A separate Income or Life Interest Trust to distribute income to family members
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Additional discretionary elements to deal with future generations or non-participating beneficiaries
This allows the business to remain stable and well-governed, while still delivering financial benefit to family members in a
controlled and tax-aware manner.
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"Mixed trusts exist because real lives are complex."
Why Mixed Trusts Are Sold as a Single Solution
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From the client’s perspective, a mixed trust solves one problem, not several. Packaging multiple trusts into a single implementation:
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Reduces confusion
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Avoids piecemeal planning
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Ensures all components are designed to work together
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Prevents one structure undermining another
The complexity exists in the legal design, not in the client experience.
Tax Treatment of Mixed Trusts
Each trust within a mixed structure is taxed according to its own legal character:
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Discretionary elements fall within the relevant property regime
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Interest in possession elements are taxed by reference to the life tenant
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Bare trust elements are tax-transparent
The planning challenge is not to avoid tax law, but to allocate value to the most appropriate structure.
This is why mixed trusts must be designed holistically rather than assembled ad hoc.
When Mixed Trusts Are Appropriate
Mixed trusts are most suitable where:
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Estates are significant or concentrated in a single asset
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Family dynamics are complex
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Long-term control matters more than simplicity
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Different beneficiaries require different treatment
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A single trust would involve unacceptable compromises
They are generally unnecessary for small or highly liquid estates.
How CHC Legal Approaches Mixed Trust Planning
CHC Legal does not start with trust labels. We start with:
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The risks you want to protect against
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The people you want to provide for
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The degree of flexibility you need
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The control you want to retain
Only then do we design the combination of trust structures that best fits those objectives.
Mixed trusts are not about cleverness; they are about precision.
Summary
A Mixed Trust is not a loophole or a special legal category. It is the practical recognition that one size rarely fits all in serious estate planning.
By combining different trust types into a single, coherent structure, mixed trusts allow families to achieve outcomes that would otherwise be impossible—quietly, lawfully, and with lasting effect.
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