When you advise on a trust, the first question is always the same: who is entitled to what? Answering it means separating the trust's capital (the underlying assets) from its income (the return those assets produce), and then identifying exactly what kind of interest each beneficiary holds. Get this right and everything else — how trustees may use the fund, who can demand payment, who must simply wait — falls into place. It is the foundation of practical trust advice.
What this lesson covers
- Capital and Income — how to tell the underlying trust assets apart from the recurring return they generate.
- Categories of Beneficial Interest — the main types of interest, from absolute entitlement to a mere place in a discretionary class.
- Instrument and Statutory Defaults — why you read the trust document first, and when statutory rules step in to fill gaps.
- Absolute Interests and Income During Minority — when a beneficiary can collapse the trust, and what trustees do with a minor's income.
- Vested and Contingent Interests — the crucial difference between an interest that is certain and one that hangs on a condition.
- Successive Interests and Even-Handedness — life tenants, remaindermen, and the trustees' duty to balance both fairly.
- Discretionary Trusts — what beneficiaries can and cannot demand, and how a discretionary trust differs from a mere power.