What is a beneficiary of a discretionary trust?

What is a beneficiary of a discretionary trust?

The beneficiaries are the people (including entities) for whose benefit the trustee holds the trust property. A discretionary trust usually has a wide range of beneficiaries, including companies and other trusts. The beneficiaries of a discretionary trust do not have an interest in the assets of the trust.

Who can be trustee of a discretionary trust?

Who should be Trustee? Trustee can either be one or few individual(s) or a company. Individual trustee(s) should not be below 18 years of age and should not be a disqualified person(s).

Does a discretionary trust have beneficiaries?

When you set up a Discretionary Trust, you identify a class of beneficiaries such as children and/or grandchildren who can receive capital and/or income from the trust at the discretion of the Trustees. No one beneficiary has an absolute entitlement to either income or capital.

Can a person be a trustee and a beneficiary of a trust?

The short answer is yes, a trustee can also be a trust beneficiary. One of the most common types of trust is the revocable living trust, which states the person’s wishes for how their assets should be distributed after they die. In many family trusts, the trustee is often also a beneficiary.

Can you have a Discretionary Trust with only one beneficiary?

A Discretionary Trust allows your Trustees the discretion and choice to make payments (distributions) to the potential beneficiaries (or category of beneficiaries) named within the Discretionary Trust. If you have only named one beneficiary, then this is NOT a Discretionary Trust.

Can a trustee be a beneficiary of a discretionary trust?

The short answer to the question is yes. Although the law does not prohibit a trustee of a discretionary trust from being a beneficiary of the trust, there are several potential issues that a settlor must recognise when setting up a discretionary trust (sometimes called a ‘ family trust ’).

What are the dangers of a discretionary trust?

Another concern is relationship breakdown. The assets held in a discretionary trust will not automatically be included in the property of the potential beneficiary.

Who are the beneficiaries of a trust instrument?

However, it did not follow that a beneficiary would be automatically entitled to trust information. The purpose of providing information was to enable beneficiaries to ensure accountability by the trustees for their administration of the trust in accordance with the trust instrument.

What are the powers of a trust trustee?

Trustees are routinely given discretionary distribution powers over a trust’s income and/or principal. The phrasing and scope of discretionary distribution powers, and related provisions, can have important tax and non-tax consequences to the beneficiaries and to the trustee. 2

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