A trust is a legal arrangement where the trustees are the legal owners of property but look after it for the benefit of a person or persons who are the beneficiaries.
Types of Trusts:
- Bare Trust
The beneficiary is absolutely entitled to the property in the trust. The trustees must manage the trust assets for the maximum benefit of the beneficiary. The income and gains of these funds are generally taxed as if they are the income and gains of the beneficiary except where parents set up trusts for their minor children.
- Discretionary Trust
The trustees decide to whom and when payments should be made. Discretionary Trusts are often used when it is not desirable to give beneficiaries assets outright.
- Interest in Possession Trust
The beneficiary is entitled to the income but not the capital of the trust fund, usually during their lifetime. Generally, when the beneficiary dies the capital goes to other beneficiaries. For example, a person may provide for their spouse to receive the income during the spouse's lifetime and on death the capital will go to their children.
This information shall not be deemed to be, or constitute legal advice. We are not responsible for any loss as a result of acts or omissions taken in reliance of this information.
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