There are many types of Trust Funds designed for specific situations,
There are different types of trust designed to meet different kinds of needs. The type of trust you use will depend on who the beneficiaries are, what the assets are, and how and when you want the assets to be distributed. The main types of trust are:
- Fixed Trusts, in which the beneficiaries are named and the proportions for how much to pay to each one are clearly stated.
- Discretionary Trusts, the beneficiaries though named but have no fixed right to any particular share of the Trust Fund but the Trustees have discretion as to which Beneficiary benefits and to what extent. Discretionary trusts can be used to protect your Beneficiaries from unfortunate relationships, profligate lifestyles etc.
- Interest in Possession Trusts, in which the beneficiary, such as a spouse, can use the asset when they are alive but must pass it to another named beneficiary, such as a child, when they die. This type of trust is sometimes used to ensure that one’s spouse is provided for, while keeping the estate intact to pass to one’s children. Interest in Possession Trusts have less beneficial tax rates than discretionary trusts.
- Accumulation and Maintenance Trusts, which are usually used to provide an ongoing income for children, to cover living costs, school fees and so on. These trusts attract enhanced tax rates, but they also have some complex rules and restrictions, and it is wise to seek the advice of a solicitor and/or accountant when establishing or managing such a trust.
- Protective Trusts, in which the beneficiary can receive income from the Trust while the capital remains protected. This type of trust is usually used for beneficiaries who are bankrupt or likely to become so.
- Trusts for Disabled Beneficiaries, which are discretionary trusts with special tax exemptions for beneficiaries who are disabled. This type of trust is often used to hold the compensation payments of people who are disabled due to personal injury.
- Bare Trusts – often used for Trustees to hold assets for a child until they reach adulthood
- Life interest Trust which is also known as Interest in Possession Trusts – allowing a “Life Tenant” to receive income only whilst capital is preserved for others after the death of the life tenant. If set up in a Will, these are referred to as Immediate Post Death Interest Trusts (IPDIs)
Please call us on 0207 183 0084 or email us on email@example.com if you need advise and to ask us about any reservations or queries that you may have; we are always happy to assist.