Primary Beneficiary and Primary Beneficiaries
The difference between The Primary Beneficiary and other Primary Beneficiaries?
Often there is little difference between the Primary Beneficiary and the Primary Beneficiaries. The trust requires distribution of income to all Primary Beneficiaries if the trustee fails to make a distribution of income. However if no person is entitled to the capital of the trust fund then the person entitled to the residuary estate of the Primary Beneficiary under intestacy laws will receive the benefit of the fund.
Who is entitled to the capital of the trust?
The overriding condition is that no-one is entitled to anything from the trust unless the trustee agrees to give a gift to that person. The trustee can however only give a gift of capital to a capital beneficiary and income to an income beneficiary. Primary Beneficiaries are always capital beneficiaries.
Parents, Spouses, Children and Grandchildren of Primary Beneficiaries have the potential to receive both capital and income.
If your Spouse is not noted as one of the Primary Beneficiaries then that spouse (depending upon circumstances) may not have the potential to receive the capital of the trust, but will be entitled to income.
If you do not make yourself one of the Primary Beneficiaries then you also may have no entitlement to the capital of the trust unless for example your children are Primary beneficiaries. If you want to have the potential to receive trust capital then you should record yourself as one of the Primary beneficiaries, or as the Primary Beneficiary.
Only the bloodline of a Primary beneficiary is entitled to the capital of the trust.
Who is entitled to income of the trust
Income beneficiaries are entitled to the income of the trust. Future spouses of the Primary beneficiaries will be able to receive gifts of income under the trust if the trustee decides. For tax reasons Future spouses will always be income beneficiaries however future spouses will not be entitled to capital of the trust which is reserved for the bloodline of the Primary beneficiaries.
Children and Blended Families
We will automatically appoint the children of the Primary beneficiaries to be secondary beneficiaries. The children of Primary beneficiaries are always capital beneficiaries.
If you appoint your spouse to be one of the Primary beneficiaries then this will allow for any future spouse of your spouse to potentially receive income from the trust. It will also allow for the children of your spouse to potentially receive a gift from the trust. If you want to remove the possibility of the trust being distributed to step children then you should not appoint your spouse to be a Primary beneficiary.
By default we will provide that future spouses are only entitled to income. If you want to allow future spouses to receive capital as well as income then please contact us by telephone.
Check the details in Schedule 2 and 3
After you are provided with the trust deed we can make amendments to the document.
When you receive the Trust Deed please review Schedule 2 and Schedule 3 before you print the document.
Schedule 2 sets out the capital beneficiaries.
Schedule 3 sets out the income beneficiaries.
There will almost always be an overlap.
Please call us with any questions. Ph 54791488