Continuing on from recent posts about the types of trust deeds that can be created, this week's post summarises another five types of trusts:
Life Insurance Trust – this trust allows the owner of a life insurance policy to avoid being liable for tax on the proceeds of life insurance policies post death by setting up a trust to specifically own life insurance policies. All the rights of the life insured are assigned to the trustee, and on death, no tax should be payable on the proceeds of the life insurance policy.
Grantor Retained Income Trust – an irrevocable trust established in a written agreement whereby the grantor transfers specific assets to the trust, however retains the income from or the use of the assets for a stipulated period of time.
Grantor Retained Annuity Trust – a trust where the grantor gifts property to a trust and retains the right to a fixed annual payment for a certain period of time.
Negative Gearing Hybrid Trust – this type of trust is based on the hybrid trust (profiled in an earlier post in this series). It incorporates aspects of a traditional unit trust that entitles unitholders to a fixed entitlement to income of the trust and also the aspect of the discretionary trust that allows the trustee to have a degree of control in the distribution of the capital of the trust to potential beneficiaries. The structure allows for both negative gearing tax deductions and asset protection for any capital gains derived.
Managed Investment Trust – these trusts are essentially unit trusts that carry on passive investment activities on a wide scale. When structured correctly, they can receive a concessional tax rate compared to investments in companies and other types of trusts.
Each of the above trusts is explored in View’s book – 40 Forms of Trusts – Workbook.
** For the trainspotters, ‘Touch Me I’m Sick’ is a song by Mudhoney from 1996.