Monday, October 11, 2010

Lineal descendant trust

'Lineal descendant trusts' come in many shapes and forms.

Undeniably, the popularity of the structure has been significant not only in recent years, but right back to the establishment of trusts as an asset protection and tax planning vehicle in early English law.

Whenever considering the establishment of such a trust (or reviewing a pre-existing trust), it is critical to understand how the legal firm involved in crafting the document has approached the task.

Some common themes for the structure of this kind of trust include:

1. Providing that income distributions can be fully discretionary amongst both lineal and non lineal descendants, with capital only able to be distributed to lineal descendants;

2. Both income and capital distributions being limited to lineal descendants;

3. Income and capital distributions limited to lineal descendants, unless otherwise approved by, say, the appointor.

Until next week.