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Question 1

What is a Discretionary trusts and what are its details?

Answer 1

It is an arrangement whereby:

 Settlor transfers legal ownership of property to a trust for the benefit of person/

persons (known as beneficiaries’).

 During the life of trust, the beneficiaries have no legal right to receive any income or capital from the trust fund.

 Any payment of income or capital out of the trust fund is at the discretion of the trustees, and subject only to the powers and duties specified in the trust deed.

Question 2

What is a Interest in possession trust and what are its details?

Answer 2

in this trust

 The trustees have no discretion over the payment of either income or capital assets transferred to trust.

 Income will be managed as per instructions of settler.

 Normally the income will be given to the settler during his life time and the capital will be distributed to the beneficiary after death of the settler.

Question 3

How is Income from discretionary trust taxed?

Answer 3

Gross income= Net income X 100/50

Question 4

How is Income from interest in possession trust taxed?

Answer 4

income= Net income X 100/80 If paid from saving income Gross income= Net income X 100/80 If paid from dividend income Gross income= Net income X 100/90