Discretionary & Unit Trusts
Trusts have an important role to play in both commercial and domestic operations. Essentially a trust is a relationship between the trustee who holds the legal title to property and the beneficiaries, who hold the beneficial or equitable title to property. The use of trusts is common as a means of ease of succession, flexibility with distributions for income tax purposes, minimising capital gains tax and for asset protection. A "discretionary" trust involves a class of beneficiaries not having any specific interest in the assets of the trust, but rather whose interests are determined by the trustee's discretion. Discretionary trusts are particularly common in family situations.
Unit trusts are more common in business situations and are akin to a partnership between unit holders, were each unit holder has a fixed interest in the trust. Hybrid trusts involve an element of both fixed and discretionary powers on the part of the trustee and can differentiate between distributions of capital and income.
Where trusts are used for transacting business transactions, asset protection is a major issue and for this reason it is advised that a corporate trustee be appointed, rather than one or more individuals.
We at Peacockes can give advice on whether a trust is appropriate for your circumstances and the advantages and disadvantages of a trust. We can also produce a variety of different trust deeds at short notice.