Beneficiaries and their shares

The Trust Deed will need to specify who are to be the beneficiaries of the Trust and how the shares are to be determined.

There are a number of ways that this can be done.  It is a very important aspect of a Trust Deed and important for the Settlor to understand what the choices are.  In principle they are these:

  • Specific Beneficiaries and Shares – beneficiaries can be specifically named, e.g you could name your children, or a child with special needs.  The shares which each beneficiary is to have in the trust fund can also be specified.  This of course leaves no doubt and no room for argument.

OR

  • The beneficiaries can simply be named as a class of persons – eg my children and my grandchildren and provide that the share is to be divided equally among that class.

OR

  • The beneficiaries can be named as a class or classes of persons and in addition the trustees can be given discretion to decide which of the beneficiaries are to receive benefits.

The Trustees are left with a complete discretion as to:

  • when benefits are to be paid

  • to whom benefits are to be paid; and

  • how much is to be paid.

The Trustees have discretion as to whether they distribute benefits by way of:

  • income; or

  • capital.

The Trustees do not have to make equal payments to all of the children, or all of the grandchildren, and any such payments are thus left in the discretion of the trustees.

The only restriction being that when the Trust is finally wound up the balance funds have to be distributed in equal shares between the children.