Types of Trusts
There are several types of trusts, each with different characteristics and uses. Some of the most common include:
Protects the trust assets from being used or mismanaged by a beneficiary who may have poor financial management skills or be vulnerable to creditors or lawsuits.
Trusts
Created during the lifetime of the settlor. The settlor transfers assets into the trust while alive, and the trust continues to exist after their death, often to avoid probate (the legal process of administering an estate).
Testamentary Trust:
Created upon the death of the settlor, usually through a will. It comes into effect after the settlor’s death and is subject to probate.
Non–Discretionary Trust:
A non-discretionary trust is a type of trust where the trustee’s powers to distribute income or capital to the beneficiaries are clearly defined and fixed. The trustee does not have discretion or flexibility in deciding how or when to distribute the trust assets; instead, the terms of the trust specify exactly how the assets should be distributed to the beneficiaries.
Discretionary Trust:
The trustee has the discretion to decide how and when to distribute assets to the beneficiaries. Often used for beneficiaries who may have special needs or when the settlor wants to retain flexibility in managing the trust.
Bare Trust (Simple Trust):
A type of trust in which the trustee holds the assets on behalf of the beneficiaries but has no discretion over the management of the trust. Beneficiaries can demand the transfer of the trust assets at any time.
Charitable Trust:
Set up to benefit a charity or a group of charities. Often eligible for tax advantages, such as tax deductions for the settlor.
Call Linley James Solicitors to discuss making your Trust on 0207 060 1210