Tuesday, November 13, 2018

Eight (days a week) – Trust Naming Conventions – Part VIII **


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:

Constructive Trust – this is an equitable remedy resembling a trust imposed by a court to benefit a party that has been wrongfully deprived of its rights by a person obtaining or holding legal right to property which they should not possess due to unjust enrichment or interference.

Resulting Trust – this is the creation of an implied trust by operation of law, where property is transferred to someone who pays nothing for it, and then is implied to have held the property for benefit of the initial transferor.

Bare Trust – this is a trust in which the beneficiary has a right to both income and capital and may at any time call for both to be transferred to them personally. Bare trusts usually have little or no documentation and the trustee is obliged to follow the directions of the beneficiary immediately on them being given.

Absolutely Entitled Trust – when a beneficiary is absolutely entitled to trust property, they are able to call for the asset to be transferred to them by the trustee. Often, this type of trust arises when the original trust is designed to end on a beneficiary attaining a certain age and the age is reached.

Vested Trust – once a trust has passed any perpetuity period defined in the trust (or if it lasts longer than is permitted under government legislation), then it will end or 'vest'. What happens in relation to a vested trust depends on a range of issues and it is always important to review the terms of the trust deed as a starting point.

Each of the above trusts is explored in View’s book – 40 Forms of Trusts – Workbook.

** For the trainspotters, ‘Eight Days a Week’ is a song by the Beatles from 1964.


Tuesday, November 6, 2018

Seven Seconds – Trust Naming Conventions – Part VII **


Continuing on from the last post about the types of trust deeds that can be created, this week's post summarises another five types of trusts:

Capital Protected Trust – this type of trust is designed to protect the capital of the trust fund and to preserve the trust assets for the benefit of later generations. This is normally achieved by ensuring the beneficiaries are only entitled to utilise the income of the trust.

Converting Trust – a converting trust traditionally will be a standard discretionary trust that converts into some other form of trust following a triggering event. Often, the trust will convert on the death of (say) the primary beneficiaries so that the trust will become a unit trust with discrete components allocated to each of the children of the initial primary beneficiaries.

Service Trust – a service trust is commonly used to supply the use of equipment, staff, premises and administration services to a related business. Traditionally, this type of trust has been used by professionals who were required to conduct business personally as a tax planning and asset protection strategy.

Borrowing Trust – this is a trust which is established solely for the purpose of borrowing money for the benefit an active related business entity.

Superannuation Instalment Trust
­– the superannuation legislation allows self-managed superannuation funds to borrow money, subject to satisfying strict requirements. Most of those requirements are in relation to the type of trust that must be established to facilitate the borrowing.

Each of the above trusts is explored in View’s book – 40 Forms of Trusts – Workbook.

** For the trainspotters, ‘Seven Seconds’ is a song by Neneh Cherry from 1994.