Trusts vs Family Investment Companies (FICs)

by Nina Sperring

calendar_month 15 Dec 25

schedule min read

When planning for long-term wealth preservation, two popular options often come to the fore: (1) Trusts, and (2) Family Investment Companies (FICs).

Both structures offer ways to protect assets and manage succession, but they differ significantly in control, tax treatment and flexibility.

Control over assets

Trusts: While the settlor (the person creating the trust) transfers legal ownership to trustees, the settlor doesn’t always relinquish all influence. Depending on the trust type, the settlor may retain reserved powers – such as appointing trustees or directing investments – or issue a letter of wishes to guide decisions. However, trustees ultimately hold responsibility.

FICs: Families retain direct control through shareholding and governance. Different share classes allow senior members to keep voting rights while passing economic benefits to younger generations.

Tax considerations and Inheritance Tax (IHT)

Trusts: Income and gains are taxed at trust rates, which are often higher than individual or corporate rates. Transfers into most trusts can trigger an immediate Inheritance Tax (IHT) charge if the value of the transfer is above the nil-rate band and assets within the trust may face periodic charges (e.g., 10-year anniversary charges).

FICs: FICs can be structured to mitigate IHT. Gifts of shares during a lifetime may qualify for exemptions if made within the donor’s lifetime and if they are under annual limits. Corporate tax rates apply to company profits, and dividend planning can reduce personal tax exposure.

Distributions

Trusts: Trustees decide when and how beneficiaries receive funds. This can assist vulnerable beneficiaries, for example.

FICs: Distribution follows clear rules based on share classes and is a matter of company law. Predictable and transparent. They are powerful but more paperwork involved.

Complexity

Trusts: Trusts can be relatively straight forward to set up, with compliance a few ongoing and initial compliance requirements.

FICs: FICs require incorporation, directors, and adherence to corporate governance, including filings at Companies House.

Comparison table: Trusts vs Family Investment Companies

Feature	Trusts	FICs
Control	Settlor may retain influence but trustees hold final decision making.	Direct family control via shares and governance.
Taxation	Taxed at the trust rate with periodic IHT charges.	Corporate tax rates; flexible IHT planning and efficient dividend planning.
Flexibility	Trustees decide distributions (often in accordance with letter of wishes).	Clear rules via share classes.
Complexity	Simple to set up; light ongoing admin.	Requires incorporation, accounting and corporate and governance.

Which should you choose?

If your priorities are simplicity, third-party stewardship and asset protection with moderate control then trusts are a strong fit.

FICs appeal to those prioritising control, tax efficiency, and structured succession planning within a clear corporate framework.

There’s no ‘one size fits all’. Many families use both, blending the asset protection of trusts with the control and tax benefits of FICs. Both structures can play a role in a comprehensive estate strategy.

The right choice depends on your family’s priorities. Either way, both are powerful tools in a modern estate-planning toolkit.

How we can help

If you’re looking to explore how FICs and trusts could play a part in helping you protect your wealth for the next generation, our experienced Wealth Protection team can help you explore your options based on your specific needs.

Get in touch on 03333 058375, or via email at [email protected], for a consultation with our estate planning specialists.