My OperaSolicitors liverpool What Does The Law Says About Beneficiary Trusts?
Tuesday, October 5, 2010 4:59:48 PM
Every person has a dream of planning a secure future for his family. No one knows when he might die so people try to plan for future in a way to provide security to their partners, children and even relatives. People mostly use wills to provide this safety net. Wills ensure the division of wealth and the rest of the belongings the way a person would want it after his/her death.
However, some people are not satisfied with just a simple will to settle the property matters amongst their heirs. They want a secure and more feasible arrangement that comes in the form of a trust. Additionally, in some cases, they do not have grown up heirs and are afraid of scheming relatives or friends who could usurp the property by trapping the poor kids. To avoid any such mishap, they have no other option but to set up beneficiary trusts.
Beneficiary trusts get their name by the fact that they are setup to assist a beneficiary. A trustee would be appointed by the settler who would be responsible for the running of the trust. Laws in United Kingdom demand that the purpose of the beneficiary should be very clear and also the power vested in the trustee should be well defined. A lot of different types of beneficiary trusts can be setup under the laws of inheritance for UK.
Bare Trust
The most commonly used beneficiary trust in the bare trust. It is used to provide the beneficiaries with the complete handover of real estate or any other kind of assets. Usually a person is appointed as a trustee and is given full control, but he/she is bound to transfer this control of the assets to the beneficiary when they fulfill the criteria. Normally, it is used to safeguard the rights of children under 18, and a reliable person is chosen as a trustee who then transfers all the assets to them after they get to 18 or above, according to the laws of the UK. Being underage is not a compulsion for this kind of a trust. It can also be used for adults who can receive the assets whenever they want.
Interest in Possession Trust
This kind of trust does not allow the beneficiaries the control over the assets but give them the interest and profits gained.
Discretionary trust
Discretionary trusts allow the trustee to discretely decide how much of the asset to give out to each beneficiary.
Mixed trust
If the beneficiaries have a range of different ages then a mixed trust can be formed. In this scenario the trust would be formed for the benefit of children still under age after the first one of them reaches adulthood. The adult child would be entitled directly to an interest in the possession and the remaining children would be bound to the mixed trust.
Accumulation and maintenance trust
The nature of trust for younger children also comes in the shape of an accumulation and maintenance trust. This type of trust is used for the care of young children until they reach the age of consent.
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