What Are The Principle Types Of Trust?

Bare Trust

A bare trust exists where assets are held in the name of a Trustee who has no active duties to perform by way of management. This class of trust is analogous to a nominee situation. Typically, shares of a trading entity are so held for reasons of privacy.

The Discretionary Trust

Easily the most frequently employed, the Discretionary trust gives the Trustee wide powers of investment and distribution. It is left to the Trustee (who may be guided by a non-binding Letter of Wishes from the Settler) to determine when and to which of the beneficiaries capital and/or income of the trust will be distributed, and in what proportions. Again, the Settlor can appoint as his "watchdog" a Protector to exercise appropriate control mechanisms.