In a recent PCD podcast, David Bell spoke with Dhana Sabanathan, Partner and Head of the Private Client team at Michelmores LLP, and Adam Canavan, Financial Planner at Bowmore Financial Planning, about the financial planning challenges facing a young beneficiary receiving her first major trust distribution. Their case study — Charlotte Morrison, 28, receiving £300,000 toward a London property purchase — is fictional, but the issues are ones advisers encounter regularly.

The Money Arrives. Then What?

For most trust beneficiaries, the first significant distribution is unlike anything they have managed before. A large sum lands in their world, often at a moment when their financial habits, their income, and their sense of what is possible are still taking shape. The transaction may have been straightforward for the trustees. For Charlotte, it is anything but.

She has student loans, a salary, pension contributions through her employer, and no prior experience of financial planning at this scale. She is not careless — she simply has no framework for what £300,000 means in the context of a life that is still being built.

"It's very much that education piece — helping her understand the implications of receiving this very large sum of money that she's not had before. — Adam Canavan, Bowmore Financial Planning"

The Helicopter View

The first instinct, when a large sum arrives, is to focus on the immediate question: in this case, the property purchase. But that instinct narrows the analysis precisely when it needs to be widest. Charlotte's distribution does not exist in isolation. It interacts with her salary, her pension, her student loan repayment, and any future distributions she may receive from the trust.

Canavan describes the approach as taking a "helicopter view." Getting the right outcome for Charlotte requires seeing how all the cogs fit together — not just optimising the property decision in isolation, but understanding what that decision means for her financial life over the next decade and beyond.

For younger beneficiaries, this is particularly important because the objectives are often still forming. Charlotte may not have thought seriously about retirement, or what she wants her finances to look like at 40. The job of financial planning at this stage is not to provide definitive answers — it is to get the right foundations in place, and to help her start thinking about her objectives in the right way.

What the Trustees Can Do

Trustees often have more flexibility in how they structure a distribution than beneficiaries realise. Rather than simply transferring cash into Charlotte's bank account, they might pay the conveyancer directly — ensuring the funds are applied for their stated purpose and giving the trust a clear record that the distribution did what it was meant to do.

In some cases, trustees consider structuring a distribution as a loan, with the possibility of calling it back. "It's trying to get that accountability," explains Dhana Sabanathan of Michelmores, "but actually doing it in a supportive way, because the younger we can start, the more these principles will make sense."

Trustees may also make a distribution conditional on the beneficiary engaging with financial planning beforehand. This is well within most trustees' powers, and Sabanathan sees it as increasingly standard practice. "You could absolutely work that in, because it's only going to be for the benefit of not only that beneficiary, but the other beneficiaries — because if that person then comes back cap in hand for greater distributions because they haven't been able to invest sensibly, that affects everyone."

Future Distributions and the Danger of Dependence

Charlotte's trust deed suggests she may receive further distributions — potentially for postgraduate education, and at specified ages including 35 and 45. That knowledge shapes the advice she receives today.

"The more certainty we have over future events and distributions, the better — because it allows us to be proactive. — Adam Canavan, Bowmore Financial Planning"

Building a long-term financial model that incorporates anticipated distributions allows Charlotte to understand when money is likely to arrive and how to position herself so that, when it does, she is ready to use it well. The transition from not having the money to having it should be planned for, not absorbed as a shock.

But the model must also account for the scenario in which distributions do not materialise. Over-reliance on anticipated trust income is a genuine risk — one that leaves beneficiaries vulnerable if the trust's capacity changes or if their own circumstances put them outside the trustees' priorities. "We often look at a plan and go: what if these distributions don't happen? How do we use your own finances, your own income to get you into a strong financial position?"

Sabanathan is equally direct about the purpose of the structure. The trust is not a bank account. It exists, in part, to provide protection that a direct parental gift cannot — ring-fencing assets from divorce, protecting against financial difficulty, and ensuring that wealth reaches future generations as well as the present one.

"If money comes too easily, you don't appreciate it and you don't learn enough about it. Most people setting up a trust do not want to deprive their children of ambition and achieving success on their own terms. — Dhana Sabanathan, Michelmores"

The Longer Game

For Charlotte, the property purchase is the beginning, not the end. Once she is in the market, the question becomes how to build wealth alongside the trust — using her ISA allowance, maximising her workplace pension, and starting to think about what long-term financial independence looks like for her. The trust is a foundation, not a ceiling.

Getting the financial plan right at 28 — the habits, the structures, the mindset — has a compounding effect over the decades that follow. Advisers who help beneficiaries see that early are doing something more valuable than optimising a single transaction. They are changing the relationship between that beneficiary and money, possibly for life.

Dhana Sabanathan is Partner and Head of the Private Client team at Michelmores LLP, where she advises trustees, beneficiaries, business owners, and family offices on tax, trust, and estate planning. Adam Canavan is a Financial Planner at Bowmore Financial Planning, working with high net worth clients and their families to grow, preserve, and structure their wealth.

Michelmores LLP is a Limited Liability Partnership, authorised and regulated by the Solicitors Regulation Authority (SRA authorisation number 463401) and is not authorised by the Financial Conduct Authority. This podcast is for general information purposes only and does not constitute legal, financial, tax or other professional advice and should not be relied upon as a substitute for independent professional advice tailored to your circumstances. Any commentary on financial matters does not constitute financial promotion or investment advice. Any examples or scenarios are illustrative only.

Bowmore Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Bowmore does not provide tax advice. Some areas discussed, such as estate planning, cash‑flow planning, and inheritance tax planning, are not regulated by the Financial Conduct Authority (FCA). Tax treatment depends on individual circumstances and may change in the future, including the tax position of specific products or wrappers. The discussion is for general guidance only and does not constitute personalised advice. Bowmore Financial Planning Ltd contributed to this discussion as an independent participant, sharing general insights alongside other professionals.