Q&As

Can a company be a discretionary beneficiary under a discretionary trust?

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Produced in partnership with Lynne Counsell of 9 Stone Buildings
Published on LexisPSL on 10/02/2020

The following Private Client Q&A produced in partnership with Lynne Counsell of 9 Stone Buildings provides comprehensive and up to date legal information covering:

  • Can a company be a discretionary beneficiary under a discretionary trust?
  • The nature of discretionary trusts
  • Beneficiaries of a discretionary trust

Can a company be a discretionary beneficiary under a discretionary trust?

The nature of discretionary trusts

The nature of a discretionary trust is often analysed in the context of tax cases. See Pearson v IRC and Re Trafford’s Settlement.

Trusts can be divided into two categories—namely, fixed trusts and discretionary trusts, depending on the nature of the beneficial interests under the trust. A fixed trust is one whereby a beneficiary or beneficiaries have a current entitlement to a defined part of the net income or capital of the trust fund. See: Nature and classification of trusts—overview.

A discretionary trust is a more flexible type of trust in which no single beneficiary has the right to income as it arises or to the capital of the trust fund. The beneficiaries have no interest in possession. It is for the trustees to

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