03: Main types of trust

There are several different types of trust:

A bare trust is one where the trustees simply act as the beneficiaries’ nominees. One of the most common bare trusts is where the beneficiary is a minor and cannot legally hold the property until he or she is aged 18.

An interest in possession trust A beneficiary is said to have ‘an interest in possession’ where they have a right to the trust’s income.

A discretionary trust is where the trustees have some discretion over the distribution of the trust’s income and/or capital.

An accumulation and maintenance trust is a special discretionary trust for young people where the beneficiaries will become entitled to the property or at least the income from it when they reach a certain age (no more than 25, although there are inheritance tax implications if it is more than 18). It has not been possible to set up new accumulation and maintenance trusts since 22 March 2006.Last Updated