Trust Classification

Question 1

Benefits of a trust?

Answer 1

1. Hold assets on behalf of a family member without giving them outright ownership
2. ‘Bloodline planning’ - prevent assets from going outside family
3. Prevent assets from being lost through a divorce or bankruptcy

Question 2

What are the 5 classifications of trust?

Answer 2

1. Statutory Trust: created by acts of Parliament I.E married women’s property act
2. Non-Statutory Trust - set up by settlor - Express, Implied, constructive trust
3. Public and Private Trust: public for public benefit (can be abstract purpose)
4. Fixed-Interest Trust: beneficiaries have predetermined right to specified amts. of capital or income: Bare/Interest in possession
5. Discretionary Trust: must have a default beneficary

Question 3

What are the kinds trust is a flexible trust?

Answer 3

• Form of income in possession trust
• lists potential beneficiaries: i.e: all children

Question 4

Types of Discretionary trust?

Answer 4

1. Accumulation and maintenance: beneficiaries can receive income or capital up to the age of 25.
   Can distribute for education or maintenance purposes for benefcaries
2. 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.
3. 18-25: can only benefit parent’s own children under 25, then entitled.
4. Non-Resident: all nonUK resident trustee, or mixed trustees +settlor was non-resident & domiciled elsewhere. Subject to other tax jurisdiction.
5. settlor interest trust: settlor or their family member can receive benefits from the trust.

Question 5

What are the 3 certainty for a trust?

Answer 5

1. Intention: clearly demonstrate the intention for a trust to be created
2. Subject: The subject (ASSETS to be transferred into trust) must be certain.
3. Object: The objects or PERSONS intended to benefit from the trust must be certain.

Question 6

A brief description of a public trust?

Answer 6

-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.

Question 7

With a bare trust, in England, Wales, Northern Ireland, at what age can the beneficiaries demand that trust assets be transferred to them?

Answer 7

• age of 18 in England, Wales and Northern Ireland.
• In Scotland, the age is 16