Trusts Flashcards
What 4 main types of trust exist?
Bare trusts
Interests in possession trust
Discretionary trusts
Charitable trusts
In a Bare trust what does a trustee do?
Holds a property for a single beneficiary
In a bare trust what does the beneficiary have?
Absolute interest
In a bare trust when are assets typically held until?
Assets (typically) held in trust until the beneficiary reaches the age of 18
What rate is a bare trust taxed on?
Will be taxed on beneficiaries rates
In an interests in possession trust what does the beneficiary have? and what does this entitle them to?
Life interest (so is entitled to immediate income from/ use of trust property)
Who holds revisionary interest in a Interests in Possession trust
the remainderman
In an Interests in possession trust what happens when the life interest ends?
remainderman inherits them
In a discretionary trust what does the beneficiary have rights to?
No beneficiary has right to income
In a discretionary trust what do the trustees have the power to?
o Accumulate; and/or
o Make distributions at their discretion
Trustees decide the amount of trust income and/or capital each beneficiary receives
Under a discretionary trust what is income taxed on?
Beneficiaries tax rates (taxed at 45% but can reclaim)
What must a charitable trust promote?
• Promotes a charitable purpose
What must a charitable trust be?
o Of a charitable nature
o For the public benefit
