Trust Classification Flashcards
Benefits of a trust?
- Hold assets on behalf of a family member without giving them outright ownership
- ‘Bloodline planning’ - prevent assets from going outside family
- Prevent assets from being lost through a divorce or bankruptcy
What are the 5 classifications of trust?
- Statutory Trust: created by acts of Parliament I.E married women’s property act
- Non-Statutory Trust - set up by settlor - Express, Implied, constructive trust
- Public and Private Trust: public for public benefit (can be abstract purpose)
- Fixed-Interest Trust: beneficiaries have predetermined right to specified amts. of capital or income: Bare/Interest in possession
- Discretionary Trust: must have a default beneficary
What are the kinds trust is a flexible trust?
- Form of income in possession trust
- lists potential beneficiaries: i.e: all children
Types of Discretionary trust?
- Accumulation and maintenance: beneficiaries can receive income or capital up to the age of 25.
Can distribute for education or maintenance purposes for benefcaries - Vulnerable person: Disabled & Bereaved minor(entitled at 18 of assets) - has different tax regime (only up 3%/3k can be for other benefcaries) - trustee pay as needed- has discretion on distributions, can accumulate.
- 18-25: can only benefit parent’s own children under 25, then entitled.
- Non-Resident: all nonUK resident trustee, or mixed trustees +settlor was non-resident & domiciled elsewhere. Subject to other tax jurisdiction.
- settlor interest trust: settlor or their family member can receive benefits from the trust.
What are the 3 certainty for a trust?
- Intention: clearly demonstrate the intention for a trust to be created
- Subject: The subject (ASSETS to be transferred into trust) must be certain.
- Object: The objects or PERSONS intended to benefit from the trust must be certain.
A brief description of a public trust?
-A public (charitable) purpose trust must be for public benefit. A human beneficiary is not required. It is also possible for the purpose of the trust to be abstract.
-The Charities Act 2006 sets out a range of purposes, one or more of which must be met by a public trust. So long as it continues to meet the criteria of the Act, the purpose can be varied if the original becomes obsolete.
With a bare trust, in England, Wales, Northern Ireland, at what age can the beneficiaries demand that trust assets be transferred to them?
- age of 18 in England, Wales and Northern Ireland.
- In Scotland, the age is 16