Other Types of Trust

While there are a large number of trust types available to potential settlors under English law, perhaps understandably a small group tend to be used more frequently than others. This is clearly because many individuals wish to establish trusts for similar reasons; these most often include estate planning or financial provision for dependants. However, in certain circumstances more esoteric trust types may better suit the situation.
Fixed Trusts
Fixed trusts are a potentially useful solution for situations in which the settlor wishes for their estate to be disbursed to a number of beneficiaries in certain proportions. In these cases the trustees have no discretion regarding the amount that is to be disbursed, to whom it is to be disbursed, or when. Rather, the terms of the trust are set in advance by the settlor.The defining characteristic of a fixed trust is that the settlor pre-determines the proportion of the assets placed in trust that will be disbursed to each beneficiary. It is important to note that the value of these assets need not be known. In fact, it is frequently impossible to predict this value; fixed trusts are often funded with shares, the price of which obviously fluctuates.
Discretionary Trusts
In contrast to fixed trusts, discretionary trusts offer significant freedom to the trustees. Under these arrangements, the trustees can exercise their discretion regarding the amount to be disbursed, the timing of the disbursal and, in some cases, whether or not assets should be transferred to individual beneficiaries at all. Frequently the settlor will provide guidance to the trustees to explain their intentions. This normally takes the form of a ‘letter of wishes’. This is not, however, legally binding upon the trustees; rather, it is considered to be a statement of intent to which the trustees should refer when making decisions regarding the management of the trust and its assets.Hybrid Trusts
Hybrid trusts are more complex. The terms of these trusts are designed to ensure that they can adapt to suit any unforeseen situation, be that a change in family circumstances or the tax schedule. Hybrid trusts offer trustees as much power as they would be granted in a straightforward discretionary trust, but combine this with other trust types as a ‘stop-gap’ measure.A hybrid trust might, for example, state that the trustees should decide on the ultimate disbursement of the assets but, until that time, it should take on the character of an interest in possession trust; thus, the income generated by the trust should be paid to a particular individual until such time as the trustees make a decision.
During this period, however, the trustees have the power to change the individual to whom the income is being paid. Alternatively, if the hybrid trust takes on the character of an accumulation and maintenance trust until the trustees make their own decision, maintenance payments will be paid to the relevant individual until they reach a specified age.
‘Stock’ trust documents are frequently inefficient, particularly if the settlor’s affairs are particularly complex. As such, it is worth investigating some of the less frequently used trust types to investigate their potential.
Re: How to Trace Whereabouts of Trust Funds?
My mum Barbara West should have received a trust fund in 1959 when she was 21 it was from a pit disaster that…
Re: How to Trace Whereabouts of Trust Funds?
im looking for a old trustfund that was supposed to be set up for myself and two brothers after they got thru in…
Re: Setting Up a Charitable Trust: Step by Step Guide
Hello I’d like to set up a charitable trust for a healing ashram in Devon Uk- any help greatly…
Re: Revocable and Irrevocable Trusts
My late father has set up a irrevocable trust - does irrevocable mean the trust can never be disbanded? He has set up 2…
Re: Implied and Express Trusts
With a discretionary trust where the same 6 people have benefitted on three separate occasions, does this set a precedent? All the…
Re: Revocable and Irrevocable Trusts
In 2000AD I set up a Discretionary (FAMILY SETTLEMENT TRUST) with interest of 66% in a property, to be made available on the…
Re: How to Trace Whereabouts of Trust Funds?
My parents will talks about a trust fund but my trustee wont deal So what do I do
Re: How to Trace Whereabouts of Trust Funds?
Hi my name is Liza. My great grandmother passed away in 2008. She told me that I have a trust in my name which my…
Re: Setting Up a Charitable Trust: Step by Step Guide
How can I create charity trust but only I will be chair trustee for life and after my family member…
Re: Revocable and Irrevocable Trusts
When I split up with my partner ten years ago we had drawn up a declaration of Trust leaving my current house to him. Since…