Hybrid Trusts
Hybrid trusts: These trusts are generally a cross between a Unit Trust and a Discretionary Trust (sometimes known as a Family Trust) - seeking to bring some of the advantages of each into one structure.
Classes of beneficiary
In the Cleardocs Hybrid Trust here are a number of beneficiary classes equal to the number of unit holders. Each class of beneficiaries is defined by reference to their relationship with the relevant unit holder.
Distributions in proportion to number of units
In the Cleardocs version of a Hybrid Trust, the general rule is that if the trustee makes a distribution of income and capital, then that distribution must be to each class of beneficiary in proportion to the number of units the relevant unit holder owns in the trust. (However, in certain circumstances, the trustee can make distributions that are not in proportion to the number of units the unit holder owns, see the next paragraph.)
Distributions NOT in proportion to number of units
In the Cleardocs version of a Hybrid Trust, the trustee may determine to make a distribution otherwise than in proportion to the number of units held by a unit holder. However, if the trustee determines to do this, then:
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the trustee must first give written notice about the proposed distribution to all the unit holders; and
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any unit holder (or person who is a joint unit holder) may veto that distribution and so prevent it from being made.
Download a Hybrid Trust Information Checklist and sample Trust Deed for free here.
See our online Trusts page - just part of the resources from www.onlinelegal.com.au