Topic 6 Trusts & their uses Flashcards
An arrangement where a (Settlor) gives assets to a (Beneficiary) where the beneficiary does not gain control of the asset is called a what?
Trust
Who looks after an asset for a Beneficiary?
Trustee
If a “gift of reservation” is made by a Settlor. Is the asset viewed as being part of the settlors estate for IHT purposes?
Yes as they still benefit from the assest
Benefits of placing assets in trust is what?
- Benefits can be paid out quickly
- Outside of the settlors estate for IHT purposes
Which person is this in relation to a trust?
- Sets up the trust
- Appoints the trustee
- Usually a trustee
The Settlor
Which person is this in relation to a trust?
- Appointed by the Settlor
- Must follow the trust deed
The Trustee
The Trustee Act 2000 allows trustees to do what?
Invest as trust’s assets as if they owned them themselves
What is a “Contingent Beneficiary”
A beneficiary who right an assest of a trust is dependent on something happening
What are the 3 certainties a trust must have to be valid?
- Intention
- Subject matter
- Object (Beneficiaries)
A Settlor can revoke a trust once it’s assets have been settled into?
True or False
False
What is a “Revokable Trust”?
A trust containing a deed that allows a trust to be revoked
All these are what in relation to trusts?
- Money
- Shares / other investments
- Land or buildings
- Life assurance policies
Valuables
Items that can be held in a trust
If a Settlor has potential to benefit from a trust what is the trust know as?
Settlor Interested
Income received belongs to the Settlor
What is a “Will Trust”?
A trust that is created through a will
What is an “Absolute (Bare) Trust”?
A trust established for a Beneficiary who is absolutely entitled to the trust’s assets.
Can be demanded at any time
Why are “Absolute (Bare) Trust” uncommon and inflexible?
The beneficiaries or the terms can not be changed?
What is an “Interest in possession trust” (IIP)?
A trust where a Beneficiary receives income from the trust during their lifetime or an “event (Contingency)”
What are examples of an “event (contingency)”
- Marriage
- Life event
What are the 2 types of beneficiary of an “Interest in possession trust” (IIP)?
- Life tenant (beneficiary with interest in possession)
- Remaindermen (other Beneficiaries who benefit when life tenant dies or from an “event (Contingency)”
Is a transfer to an “Interest in possession trust” (IIP) is subject to IHT as a CLT at 20% at the time of transfer?
True or False
True
