Interest In possession Trust:
Interest in possession trust is a trust that meets either or more of the following criteria:
a). A beneficiary existing that has a right to receive the income generated by the trust if it exists;
b). The right to enjoy the assets of the trust at present if available;
c). The right to enjoy the property associated with the trust, for the time being, i.e. interest in possession. The beneficiaries are called "life tenants" or "life renter in Scotland"; and
d). The beneficiary cannot control the assets that provide the income.
The income can only be made available to beneficiaries after deductions of any expenses incurred.
Examples of interest in possession trusts:
a). The present right of enjoyment of net income of a property;
b). Trust for all shares owned, and
c). A beneficiary granted the privilege of occupation; to name but a few.
Advantages of Interest in possession trusts:
a). They are usually taxed, and the tax is added to the country's tax collection income, resulting in a boost in the economy;
b). They are generally not taxed at special rates, which makes them more accessible and less expensive to administer, although there are exceptions to this rule;
c). Beneficiaries do not get taxed for any trust gains;
d). No credit is granted to beneficiaries for any tax paid by trustees, and
e). Right to enjoy non-income-generating assets exists.
Interest In Possession Trusts and the overall contribution to the trust's market:
The interest in possession trust does contribute to the country and the economy as a whole as capital gains tax can arise and gets paid in certain circumstances. Inheritance tax can also occur in some instances, and this does help contribute to the economy as a whole as it contributes to the tax collections helping boost the economy. The existence of this type of trust also helps contribute variety and diversity to the trust market, resulting in consumer choice and fair trading. This also helps expands the trust market as a whole.
Jumleap Estates & Wills Planning Private Limited, confirms that nothing stated on this article constitutes advice on which you should rely. Our blog articles are for general information purposes only. Professional or specialist advice should always be sought before taking any action relating to any views, issues or matters discussed. Jumleap Estates & Wills Planning Private Limited will not be held responsible for any action taken as a result of this article.