Beneficial entitlement Flashcards
What is a capital return on trust property?
A return which relates to the underlying value of the property in question.
e.g. market value of a house
What is an income return on trust property?
A return of money or equivalent on a regular basis which derives from the property in question.
e.g. rent of a let house
If a beneficiary has an interest in capital, what is their interest classified as?
Absolute
If a beneficiary has an interest in income, what is their interest classified as?
Limited
What is a vested interest?
Where the beneficiary exists and does not have to satisfy any conditions imposed on them by the the terms of the trust before becoming entitled to the property.
What is a contingent interest?
Where an interest is conditional upon the happening of some future event or the existence of a beneficiary.
Once they satisfy the condition, the beneficial interest vests and they have a vested interest.
What happens if a beneficiary dies before a contingent interest is vested?
Unless the settlor has provided that the beneficial interest should pass to someone else, it returns to the settlor.
What is a successive trust?
Where property is held in trust for a succession of beneficiaries.
They are also known as life interest trusts.
In a discretionary trust, when does an object become entitled to the trust property?
Within a class, it is when a trustee exercises their discretion to distribute property.
An individual will become a beneficiary when they become a trustee.
What is a bare trust and what is an example?
A trust for a sole, adult, mentally capable beneficiary that gives the beneficiary a vested interest.
The trustees must handle the trust property as the beneficiary dictates.
Example - a stockbroker holds a portfolio of shares they are managing on a bare trust for their client.
Can a bare trust exist for multiple beneficiaries?
Yes, provided all the beneficiaries are:
In existence and ascertained
18 years old or over and have mental capacity
Agree to what is being proposed
