Family Investment Companies vs Trusts: Which is Right for You?

Jessica Young's profile picture

Jessica Young - Solicitor Apprentice

Published
Article reviewed by Ryan Fletcher and Bik-ki Wong.

What is a Family Investment Company

Family Investment Companies (FICs) and Trusts are two of the most popular ways in which people choose to preserve and pass on wealth to future generations.

Both Trusts and FICs offer similar long-term goals and are designed to manage and protect wealth. However, they do differ. The choice between the 2 structures depends on your goals around control, tax efficiency, privacy, and succession.

In this blog, our Private Wealth Lawyers break down the key differences between FICs and Trusts to help you determine which is better suited for your objectives.

Speak To Our Private Wealth Team

What is a FIC?

A Family Investment Company is a private limited company used for wealth management and estate planning.

Typically, parents or older generations set up the FIC and invest cash or assets into it.

Family members, including children or grandchildren, are given shares, often with different rights attached to allow ownership without transferring control.

What Is a Trust?

A Trust is a legal arrangement where a person (the settlor) transfers assets to trustees to hold and manage for the benefit of beneficiaries.

Trusts are governed by trust law and can be highly flexible, private, and tailored to specific intentions, such as providing for children, shielding assets, or mitigating inheritance tax.

Sign Up For The Latest Legal Insights

Family Investment Companies

Key differences between FICs and Trusts

Feature

FICs

Trusts

Control

 

Will depend upon the rights attaching to each class of shares; usually voting control is reserved to the founder class of shares.

 

Control is with the trustees who usually must make decisions unanimously.

Privacy

 

Public filing of certain information is required at Companies House each year.

 

No public records other than registering the terms of the trust with TRS and therefore more private.

Succession

 

Shares are passed down generations or are held in a trust.

 

Beneficiaries benefit depending upon the terms of the deed.

Costs to set up

 

Legal, tax and accounting costs to factor in.

 

Fees can vary depending on the complexity and number of trusts you wish to implement. If investments are involved, you may also wish to take financial advice.

Ongoing administration requirements

 

Annual filing requirements and accounting obligations, as well as ad-hoc professional fees.

 

Usually annual requirements such as AGM, minutes, trust accounts, deeds, updating TRS and sometimes tax returns (depending on what assets are held).

Flexibility

 

Very flexible and capable of being structured to suit individual needs.

 

Customisable and easy to vary to suit your needs. The most frequently used trust is a discretionary trust, which gives your trustees full control to decide how to invest and who to benefit, how much and when (if anything).

Taxation

 

The FIC itself is taxed as a company and is therefore subject to corporation tax.

Individual shareholders pay tax on any dividends received at the relevant dividend income rates.

Any tax payable by a shareholder on a disposal of shares should be taxed as capital (subject to capital gains), but it could be taxed as income in certain circumstances (subject to income tax).

Shares will form part of an individual shareholder’s estate and so may be subject to inheritance tax.

 

Depends on the type of trust set up. Discretionary trusts are taxed on trust rates, which are often high, but the flexibility to appoint out to lower/or non-tax-paying beneficiaries can often mean tax can be reduced or mitigated.

 

In summary, both Trusts and Family Investment Companies offer powerful tools for managing and preserving wealth, but they serve different purposes.

Often, they are used together so that after a FIC has been created, shares are put into trust rather than given to an individual outright, which provides further flexibility and asset protection so that the shares do not form part of an individual’s estate.

Get In Touch With Our Wealth Team

Contact Our Private Wealth Team

Contact our Private Wealth Team today to arrange a consultation and take the first step toward peace of mind for you and your future.

0161 941 4000

Latest Private Wealth News

Jessica Young's profile picture

Jessica Young

Solicitor Apprentice

Jess joined Myerson Solicitors in 2022 as part of the first cohort of Solicitor Apprentices, after completing her studies at Blessed Thomas Holford Sixth Form.

Jess’ first seat consisted of her being in the Business Services Department, receiving training from the marketing and Legal PA teams as well as providing firm wide support.

She is currently undertaking her fourth legal seat within the Dispute Resolution Department, which she started in September 2025.

During the 6-year course, Jess will progress through all of our legal and non-legal departments, whilst studying part time at BPP Law School before qualifying as a solicitor in 2028.

If you would like to learn more about the Myerson Apprenticeship Programme, as well as Jessica's own experience in completing the Solicitor Apprenticeship, please click the below link to listen:

https://ow.ly/7Px450QyHtT

About Jessica Young