Trusts: start with the purpose, not the label
Different trusts solve different problems. The important questions are what you want to achieve, who should benefit, who should control the assets and what tax or administration follows.
Understanding trust choices
When does the arrangement take effect?
Lifetime Trusts
Trusts established while the settlor is alive, including property, control, tax and administration issues.
Life Interest Trusts
Give one person a lifetime benefit while preserving the underlying capital for somebody else.
Discretionary Trusts
Trustees have discretion over which beneficiaries receive income or capital, subject to the trust terms.
Property Protection Trust Wills
A Will-based structure, not a lifetime transfer of the home.
Lifetime trust or Will trust?
| Question | Lifetime trust | Will trust |
|---|---|---|
| When is it created? | During the settlor's lifetime. | Under a Will, normally taking effect after death. |
| When do trustees start holding assets? | When assets are validly transferred to the trust. | When the Will trust takes effect and estate assets are transferred. |
| Can tax arise? | Yes. Entry, ongoing and exit tax issues can be relevant depending on the structure. | Yes. Treatment depends on the Will trust and circumstances. |
Trust guides
Lifetime Trusts: Pros & Cons
A balanced guide to advantages, disadvantages, tax and control.
What are trustees?
Responsibilities, selection and administration.
Lifetime trust costs
What drives setup and ongoing administration costs.
A simple first step
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