What is a hybrid discretionary trust?

What is a hybrid discretionary trust?

A Hybrid Trust is basically a combination of a discretionary trust and a unit trust. The trustee of a hybrid trust generally has the power to distribute income and capital among the beneficiaries as described in the deed, as in a standard discretionary trust.

Is a hybrid trust a legal entity?

Yes, a corporate trustee can own units in a hybrid trust – as long as you include the trustee’s name and their capacity. In this case, the trustee holds the units in the hybrid trust on trust for the beneficiaries of the trustee’s own trust. (The trust itself cannot own units as it is not a legal entity.)

How does a hybrid trust work?

A hybrid trust, as the name suggests, is generally a hybrid of a discretionary and a unit trust. The trustee has the discretion to distribute income to the discretionary beneficiaries, and the unit holders then have a right to receive income and capital that has not been distributed to a discretionary beneficiary.

Who would use a hybrid trust?

The hybrid trust is a flexible commercial structure and is particularly suited to situations where two or more unrelated persons co-own a business or an investment, and there is a potential to distribute income and capital gains and tax credits and rebates to related persons.

Why have a corporate trustee for a family trust?

Why Have a Corporate Trustee For a Family Trust? It is a common practice to have corporate trustees for family trusts for tax benefits. This ensures the limitation of the trustees’ liability to the corporate asset. Generally, corporate trustees are shell corporations with no, or minimal, assets.

What is Hybrid trust model?

A Hybrid Trust is a cross between a Discretionary and a Unit Trust. This type of structure is quite appealing because it includes the benefits of both and is an extremely useful structure. You can split the trust up into units while also having beneficiaries to distribute to at your discretion.

How is a hybrid trust like a discretionary trust?

A Hybrid Trust is a combination of both a Discretionary Trust and a Unit Trust. Within a Hybrid Trust, the trustee is given the power to distribute trust income and capital among a nominated class of beneficiaries (similar to a Discretionary/Family Trust).

How does a discretionary trust for a family work?

What is a Discretionary Family Trust? A trust is established for a family with a payment of an amount, called “settled sum” by the settlor to the trustee to be held in trust in accordance with the deed for the benefit of the beneficiaries.

Can a trustee be changed in a discretionary trust?

Although changes can be made to discretionary trusts and to hybrid trusts, they need to be carefully thought through on the basis of sound legal advice. “A change of trustee does not in itself result in a termination of the trust.

Who is the manager of a hybrid Trust?

An agent or manager is sometimes used to act on behalf of a partnership of trusts. This is done predominantly for administrative ease. What is a Hybrid Trust? A Hybrid Trust is basically a combination of a discretionary trust and a unit trust.

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