A Quick Guide to "Beneficiaries"

What is a "Beneficiary"? 

Who can be a "Beneficiary"?

Why do our Deeds refer to "Designated Beneficiaries"? 

Why NowInfinity deeds do not need to mention Companies or Trust on the schedule page?

 

What is a "Beneficiary"? 

A unique characteristic of a Trust is that it effectively permits ownership of the property to be divided between its legal and equitable (or beneficial) ownership.

The Trustee(s) of the Trust has legal title in Trust property. However, they owe equitable obligations to the Beneficiary as set out in the Trust Deed.

As such, the Beneficiary of the Trust has beneficial ownership over the Trust property - it is essential for their benefit that the Trust has been created and administered.

Beneficiaries of a Discretionary Trust, for example, can be classed as either Primary or Secondary Beneficiaries:

  • Primary (or Specific) Beneficiaries are those that are named explicitly in the Trust Deed. In a family Trust setting, they will generally consist of the client husband and wife and sometimes their children.
  • Secondary (or General) Beneficiaries are typically ascertained by their relationship to the Primary Beneficiaries. This may include other family relatives but can also be related Companies, Trusts and charitable organisations.

Some Trusts do not stipulate different categories of Beneficiaries. For example, in a standard Unit Trust Beneficiaries will simply be "Unitholders". 

As always, please refer to the specifics of your Trust deed when identifying the Trust's Beneficiaries. 

 

Who can be a "Beneficiary"?

A Beneficiary can be an Individual, a Company or the Trustee of another Trust. 

Note: the Trustee can also be a Beneficiary of the Trust, but only if the trust has more than one Trustee - you can never have a sole Trustee and sole Beneficiary being the one person.

 

Why do our Deeds refer to "Designated Beneficiaries"? 

Our Trust deed coins the term "Designated Beneficiary" - this is the Beneficiary (or Beneficiaries) named in the Schedule or the Trust Deed and can be either a Primary, Secondary or any nominated Beneficiary.

The Designated Beneficiary may, by default, receive an automatic distribution of Trust assets in a situation where the Trustee has not exercised its power under the Trust to distribute all trust assets by the end of the Vesting Date. 

 

Why NowInfinity deeds do not need to mention Companies or Trust on the schedule page?

In NowInfinity deeds, one doesn't specifically need to add Companies, Trusts & charitable organisations under Beneficiaries on the schedule page. Any Company, Trust or charitable organisation related to the Beneficiaries (primary or secondary) are already covered under the Beneficiary clause and the Trustee can distribute profits to them.

 

 

 

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