Trusts

Question 1

Trust definition

Answer 1

legal obligation binding a person, the trustee, to deal with property over which they have control - the trust property for the benefit of the beneficiary

Question 2

who is the settlor

Answer 2

the donor or the original owner of the property or provider of funds

Question 3

How many trustees for trust of land

Answer 3

4 max

Question 4

Gifts from normal expenditure

Answer 4

exempt from IHT provided the payments are habitual ( regular) and the donor has enough income remaining to maintain living standard

Question 5

Two reasons for placing a plan in trust

Answer 5

iht planning and to retain some control over a gift

Question 6

Absolute trust features

Answer 6

cannot be altered once it has been set up, sole duty of trustees is to hold the property for the beneficiaries and transfer to them when required.

Question 7

Life interest trust

Answer 7

right to income/enjoyment of trust property for their lifetime and then passes to someone else.

Question 8

Subsequent beneficiaries in a life interest trust aka

Answer 8

remaindermen and have a reversionary interest in the gift

Question 9

Flexible trust

Answer 9

trustees have power to change the beneficiaries

Question 10

default beneficiary

Answer 10

gift-over- to whom the beneficiaries will be paid if no other beneficiaries are appointed

Question 11

Difference between a flexible trust and a discretionary trust

Answer 11

if settlor doesn’t appoint a default beneficiary - it’s known as a discretionary trust. Initially the trust has no one entitled to income or capital and the trustees have discretion over any distribution

Question 12

Statutory trust

Answer 12

Married woman’s Property Act - Act of parialiament or trust created under laws of intestacy

Question 13

When is a trust affected by bankruptcy

Answer 13

When a settlor is declared bankrupt