Hybrid Trust Set up Steps:
- Ensure you have consent and all the personal details for the Trustee/s, Unit holders and Beneficiaries,
- Decide on the type of trustee/s (company or individual),
- Decide on the class and value of the units for each Unit holders,
- Once you have all of the above requirements in order, you are ready to apply!
Setting up a Hybrid Trust
Within a Hybrid Trust, the trustee is given the power to distribute trust income and capital among a nominated class of beneficiaries (similar to a Discretionary/Family Trust). The income and capital is distributed part in a proportional method (like a Unit Trust) relative to the number of units held by each beneficiary and part in a discretionary method.
The Hybrid Trust has several unique features:
- The beneficiaries hold their respective interests within a defined set of classes from ordinary units to a range of special classes of units each class having its own “terms of reference”.
- The various classes have fixed entitlements within each class so that a group of say special “A” class unit holders will have a fixed entitlement to any profit distribution which the trustee decides to pay that class.
- The fixed entitlement operates in a similar way to the unit trust but applies only to the money that is directed to that particular class.
- The Trustee has complete discretion to distribute profit to any class of unit holders, but once the decision is made to distribute to a particular class or classes of unit holders then the entitlements are fixed within that class, the trustee having no discretion within that class of unit holders.
- The Hybrid Trust enables the trustee to pay money to certain classes and therefore obviously not to pay money to other classes of unit holders.
- The Trustee can issue additional units that have different “terms of issue”.