C13 - Types Of Trust

Question 1

Revocable trust

Answer 1

Settlor may revoke the trust and reclaim the assets if they change their mind after settling the trust or if their circumstances change in the future

Question 2

Irrevocable trust

Answer 2

Unable to change or undone

Courts have powers to vary terms of trust

Question 3

Discretionary trusts

Answer 3

Settlor specifies who may benefit either by naming beneficiaries or by stating class of beneficiaries 
Trustee had power to accumulate income or to distribute income/capital

Question 4

Hybrid interest in possession trusts

Answer 4

Death of life tenants, trust changes from llp to discretionary

Allows settlor to retain benefit for
Himself and restrict benefits enjoyed by fire beneficiaries

Question 5

Charitable

Answer 5

Established to benefit charities

Purpose: relief poverty, further of religion, education, benefit community

Question 6

Interest in possession

Answer 6

Beneficiary has fixed interest from outset stated in trust deed

Life tenants are entitle to income from trust during lifetime

Stealth of life tenant - trust property passes to names ‘residual beneficiaries ‘ in specified amounts/portions

Used by settlor who wish for income from from assets to he enjoyed buy capital preserved for future generations

Question 7

Accumulation and maintenance

Answer 7

Maintenance of children under 25

Settlor/spouse never benefit

Question 8

Irrevocable

Answer 8

Can’t be changed or undone

Question 9

Protective/spendthrift trusts

Answer 9

Trust terms may make interest of beneficiaries liable to terminate at specific date (bankrupt, attempt to sell, dispose rights of assets)

Protests assets at times as they’re not available to creditors

Question 10

Revocable

Answer 10

Settlor can reclaim assets

Question 11

Settlor reserved powers

Answer 11

Remove trustee, enforcer, protector, beneficiary

Powers - directions as to appoint investment manager

Question 12

Employee

Answer 12

Employers may create to benefit employees and family’s

Question 13

VISTA

Answer 13

Settlor wishes to retain control over underlying company or shares to be retained regardless of performance BVI

Question 14

STAR

Answer 14

Mix purpose and beneficiaries within same trust

Beneficiaries don’t have enforceable rights

At least - enforces

1 trustee licence trust corporation in Cayman Islands

Question 15

Bare

Answer 15

Trustee holds property

Trustee no discretionary power and just hold property and deal with it or transfer

Question 16

Unit

Answer 16

Pooled Into unit trust

Investment vehicle for investors

Question 17

Fixed interest

Answer 17

Benefited absolutely entitles to fixed interest