Types of Trusts
Trusts may be created for a range of reasons such as tax effective estate planning, to provide ongoing support for a beneficiary, or to benefit a charity.
All trusts need careful explanation and proper assessment of their benefits. It is important to match your wishes and your beneficiaries’ needs with the right type of trust. NSW Trustee & Guardian is able to discuss your requirements and recommend the trust which best suits you.
There are several different types of trusts:
These are generally created in Wills and are administered for children until they reach the age of 18 or older as determined by the provisions of the Will. These trusts can be created to take effect if one or both parents die, and can help to provide tax effective income to the children. Funds can be used for the child’s education and living expenses or for particular purposes you may specify in your Will.
Trusts for adults not able to manage their own finances
Trusts for adults can be an extension of a trust created for a child, if that child does not have the capacity to manage their own affairs when they turn 18. The trust can continue for the lifetime of the beneficiary.
Special Disability Trusts
Special Disability Trusts allow a person to plan for the future care and accommodation needs of a loved one with a severe disability. Find out more about Special Disability Trusts.
You may wish to provide long term income benefit to a charity by providing tax free income from your estate, rather than giving an immediate gift. This type of trust is effective if large amounts of money are involved and the purpose of the gift suits a long term benefit e.g. scholarships or medical research.
Family Discretionary Trusts
Family Discretionary Trusts may be created by a Will, to provide discretion in the way income and/or capital is split between a family group (the beneficiaries) for a period of time. Ultimately the assets in the trust are either used up or gifted to beneficiaries when the trust ends, such as a set date or when the last beneficiary reaches a specified age.
The trusts are often used to manage family succession over two generations when protecting assets against family disputes and marriage breakdown. They can be created during your lifetime but there are additional tax advantages when the trust is established in your Will.
Trusts for Accommodation – Life Interests and Right of Residence
A Life Interest or Right of Residence can be set up to provide for accommodation for your beneficiary. They are often used so that a family member can have the right to live in the family home for as long as they wish. These trusts can be restrictive so it is particularly important to get professional advice in deciding whether such a trust is right for your situation.