As mentioned in the last post, there are a myriad of approaches for creating any form of trust.
The first five profiled in this series are summarised below:
2nd Generation Family Trust (or a 'GST' – generation skipping trust) – this is an estate planning technique whereby assets are placed in trust for the benefit of grandchildren and later generations, rather than passing to the benefit of living children . From an asset protection viewpoint, the net unallocated assets in this type of trust should be outside the scope of a challenge to a deceased estate in states and territories other than NSW.
Lineal descendant, bloodline or capital reserved Trust – the deed establishing this type of trust typically limits the capital of the trust for the ultimate benefit of the specified beneficiaries (such as lineal descendants) but allows income distributions to a wider class of discretionary beneficiaries (such as spouses).
Estate Proceeds Trust – this is a trust established following the death of a parent of a minor child structured to qualify for excepted trust income tax concessions. Where there are two or more children to benefit from the estate proceeds income tax concessions, either a separate trust deed can be established for each child or a single deed is established benefitting all children.
Child Maintenance Trust – this is a trust established as part of a family law settlement which qualifies for the excepted trust income concessions. The main purpose is to fund all or part of the child support obligations associated with the upbringing of children. These obligations would otherwise be met personally in after tax dollars by the obligated parent.
Discretionary Trust – this is the most common trust, often referred to as a family trust. The trustee has a wide discretion to determine which of the beneficiaries are to receive the capital and income of the trust and how much each beneficiary is to receive.
Each of the above trusts is explored in View’s book – 40 Forms of Trusts – Workbook.
** For the trainspotters, ‘Waltz #2’ is a song by Elliot Smith from 1998