Apr
10
Basically, trusts can be divided into two types: fixed trusts and discretionary trusts. The third kind is a hybrid trust which is a mix of the two types. In this type of trust, the trustees have to pay some amount of the trust’s assets to each of the beneficiaries determined by the settler. But the trustees have the discretion to determine how much trust property has to be given out to the beneficiaries and to whom. The trustees also have the right to decide which assets are to be dispersed: capital distributions or income.
There are many benefits of a hybrid trust one of which is the component of estate planning. This type of trust is able to reduce 50% tax relief on capital gains, if properly executed. It also allows naming all the beneficiaries so that the trustee can decide on how to disburse the assets. Usually, a hybrid trust lists the larger items and leaves the smaller assets to the discretion of trustee.