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Beneficiary Of Trusts And Their Rights
A trust is a legal arrangement through which a person gives control of capital or property to a trustee for the benefit of a third person. A beneficiary is a person for whom the trust fund is created. A beneficiary can be a person like, a child, a grandchild or a spouse, and can also be organizations and entities. Beneficiaries can be minors or even unborn children.
There are two types of beneficiaries. First type is the fixed beneficiaries; they are entitled by the trust to receive a set amount of funds from the trust. In case of these trusts, beneficiaries are most of the times considered to be the possessors of the money/ possessions hold by the trust. Second type is the discretionary beneficiaries; for these beneficiaries the trustee has to come to a decision and confirm how much money they will be receiving in a certain period of time. In case of such trusts, the trustee is fully responsible to take hold of the funds and can take any decision according to their wishes.
Nowadays, beneficiary trust funds are an important part of any legal system. Most wealthy families create trust funds for their children that they get benefited from at a certain age, which is usually 21 years. One can say that it is an elite concept created for safeguarding wealth and passing it on through generations. Trust funds are created to ensure that the offspring will live a comfortable life, and can be created for many purposes such as education or living. Trusts can also ensure that property and funds are handled according to your wishes after your death. Trust property or capital can include land, buildings, money, investments or valuables.
The system of trust is not similar in various countries. In some countries, they have laws which are not in the favour of everlasting trusts. According to their system of law the specified period of time has to be limited in the trust document. Hence, beneficiaries can receive a preset amount of money from the bank accounts for a limited period of time, or the beneficiaries can become possessor of a particular amount of money or land when they reach the specified age.
The taxation of beneficiary trusts has turn out to be a multifaceted issue. In the UK, according to the system of law regarding taxation of trusts, the beneficiaries need to pay tax on the amount of money they receive at a normal tax rate. And, the trustees are not legally responsible to pay tax.
Beneficiary trust should ideally be unalterable, because the grantor of the trust gives up his control over his capital or possessions under the trust. Hence, the grantor also gets tax advantages as they would not be legally liable to pay any tax for the possessions under the trust.
Trust funds can also be handed over to generations, and this can lead to the creation of a perpetual trust. The beneficiaries may, through a process, decide to hand down the trust to another individual or business entity. Since the trust contains a property or capital, beneficiaries can sell it, re-assign it, exchange it, release it, or even mortgage it just like other items of property.
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