Types of Trusts
I have written an article explaining what a trust is, but this article will take it a bit further.
A trust is a relationship between a person (trustee) and another person (beneficiary) in which the trustee holds property (trust property/trust fund) for the benefit of the beneficiary. Sometimes there is more than one trustee, or the trustee is a company. Often there are many beneficiaries.
Express trust v implied trust
An express trust is one that is created by a deed – by clear words and the intention to create a trust. An implied trust is one that the law implies has been founded, based on the circumstances and that there would be an injustice if a trust wasn’t implied. Often an implied trust is created when only one spouse owns the family home, but the law implies that the spouse holds the property partially on trust for the other spouse who also owns part of it.
Constructive trust v resulting trust
A constructive trust is a kind of implied trust, which the law constructs to make sure that justice is met (such as in the circumstance above in which one spouse owns the family home – the court in a family law property settlement will construct a law for the spouse who is not a registered proprietor). A resulting trust is an implied trust which operates so that the property returns to the original owner after it was transferred to the trustee for a period of time.
Private trust v public trust
A private trust is one established for the benefit of a particular individual or group of people (a family). A public trust (often known as a charitable trust) is one established for the benefit of a larger purpose.
Discretionary trust v bare trust
A discretionary trust is one in which the trustee has a wide discretion in relation to the dealings with the trust property. A bare trust is one in which the trustee has no discretion, but has nominal control, and only one duty, namely to convey the property on demand to a specified party.
Discretionary trust v fixed trust
A discretionary trust is one in which the trustee has a wide discretion in relation to the dealings with the trust property. A fixed trust is one in which each beneficiary has a fixed, or proportionate, interest in the income and capital of the trust. A unit trust is a form of fixed trust, as the interest a beneficiary has in the trust is determined by the number of units held.
Inter vivos trust v testamentary trust
An inter vivos trust is one that is established during the life of the person setting it up. A testamentary trust is one that arises under a Will after the person establishing it dies.
Most family trusts are an express, private, discretionary, inter vivid trust!