#6580 - Business Trusts - Trusts

BUSINESS TRUSTS TRUSTS | PAGE 45 BUSINESS TRUSTS Discretionary Trusts: * Type of express trust * Criterion certainty test * Interest of beneficiaries is that of a mere expectancy until any benefit is attributed to them by the trustee * Discretionary trusts allow: o High tax--payer to distribute pre--tax income among family members so as to minimize the overall tax burden o Good way to shift benefits away from bankrupt individuals to other beneficiaries who will not be forced to surrender the benefit to creditors o Trustee is relatively powerful SS? Still bound by fiduciary obligations o Trust property is given to the trustee (usually a nominee company) o Trust property is usually a nominal sum with larger sums added later to diminish stamp duty (where applicable) o Trustee has a very wide discretion to distribute the income so as to achieve tax minimisation SS? Beneficiaries are usually the husband, wife and children, though others may be included o The trust is to continue for a specified period after which the trustee will divide the capital o There is usually a power to advance capital to the beneficiaries o The husband and/or wife are usually given powers as appointers in the trust instrument to remove or appoint trustees TRUSTS | PAGE 46