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A life interest trust allows you to name a beneficiary to use and enjoy an asset during their lifetime. During the period of the life interest trust the property remains in the name of the trustee.

Then, when that beneficiary dies, the asset can then be transferred to other nominated beneficiaries.

A life interest trust not only allows a beneficiary to use an asset but also provides for them to receive any income generated by that asset. For example, people will often create a life interest in a property for a beneficiary. This means that the beneficiary can live in the property if they choose but they can also receive any rent from the property if it is rented out.

This type of trust also allows a beneficiary to request that the property is sold and another property is purchased.

This type of trust may be used in second marriage situations where the person ultimately wants their property to go to their children but still wants their spouse to have rights to live in the property or receive income from that property.

Example

Gillian is Simon's second wife, and Simon has two adult children from his first marriage. Simon is the sole owner of the family home and has determined that in the event of his death, he wants Gillian to be able to use the home for her needs during her lifetime. However, ultimately, he wants his children to inherit the property. Simon gifts Gillian a life interest in his property and when the life interest ends, Simon’s children will be entitled to receive any property or assets held under the life interest trust.

As Gillian has a life interest, she can choose one of the following options:

• Continue to live in the property
• Ask the trustee to sell the property and purchase another one with the sale proceeds
• Ask the trustee to rent the property and she could receive the rent
• Ask the trustee to sell the property and receive the income from the investment of any sale proceeds.

A right of residence trust which provides a right to a beneficiary to be able to reside in a particular property of the estate. Generally, it is conditional on the beneficiary residing there on a permanent basis, and is usually granted for life, for a fixed period or upon the happening of a particular event.

The right of residence ends when the beneficiary permanently vacates the property. The property then passes to nominated beneficiaries based on the terms of the Will.

Example

Gemima is a 63-year-old widow with two adult children, Roberto and Kalvin. Roberto lives with Gemima in her house and has done so for 10 years. Roberto has minimal assets and receives a disability support pension.

Gemima wants to ensure Roberto has a stable place to live after her death but she also wants to leave her estate to both her boys. In her Will, Gemima provides Roberto with a right to live in the house for up to five years, after which time, the house is to be sold and the proceeds of the house split equally between her two sons.

A discretionary trust provides the trustee with discretion to distribute the income, or the income and capital, of the trust, to the beneficiary for their benefit. The trust may be set up for the life of the beneficiary, for a shorter period, or until a designated event.

A discretionary trust may also provide discretion to the trustee to decide who may receive income or capital from the trust and in what proportions.

This type of trust might be established when the person making the Will wishes to provide for a beneficiary with impaired decision-making capacity.

Example

Janet wants to provide for her daughter Helen in her Will. Helen has a disability which affects her ability to manage funds effectively. Janet wants to nominate someone to act as a trustee for Helen’s share of the estate to support Helen throughout her lifetime.

Janet is happy to give the trustee absolute discretion as to the distribution of income and capital for Helen’s maintenance, benefit and advancement. Although she is not concerned if any money is left over, Janet stipulates that when the trust ends, whatever is remaining goes to her grandchildren.

Contingent trusts are where the beneficiary is gifted assets or funds conditionally. Usually, this condition is the attainment of a certain age.

Contingent interests do not belong to the beneficiary until the contingency, is met (for example, a nominated age). Therefore, a contingent trust will finish upon that condition being satisfied or if the beneficiary dies before the condition can be met.

Example

John and Cathy have three children all under 18. They decide that they don’t want their children to receive any benefit from their estates until the children turn 21. In their Wills, John and Cathy stipulate that their children must live to be 21 before they can share in their estate. The Trust also provides that any capital earned on the funds held in trust be used for the maintenance, benefit and education of their children prior to the children turning 21.

Minor in this sense is the term given to a person who is under 18 years of age. Setting up a Minor’s Trust allows funds gifted to a child to be protected until that child comes of age. Any assets, funds or entitlement received are held in trust until the minor turns 18.

Minor’s Trusts might also be established for situations where a child is to receive some form of entitlement such as damages compensation or criminal compensation. Any assets, funds or entitlement received would be held in trust until the minor turns 18. Queensland Public Trustee acts as a trustee for minors in a number of different ways.

• The minor receives an entitlement as a beneficiary in a deceased estate under a Will or intestacy and Queensland Public Trustee is appointed trustee of the trust
• A private executor or administrator of an estate to which a minor is entitled approaches Queensland Public Trustee to take over the management of the entitlement. This may include where the trust has already commenced, and the trustee wishes to retire
• A court issues a sanction of damages compensation
• A court issues an order in favour of a minor (e.g. criminal compensation)
• Trust monies payable to a minor under any superannuation, insurance or benefit fund
• The minor receives a prize
• Trust arising from workers' compensation due to the death of a parent or guardian

Example

In his Will, Joe leaves $20,000 to his granddaughter Leanne. Joe didn’t state what age Leanne needed to be to receive the gift so if Leanne is under 18 when Joe passes away, a trust will be set up for her. When Leanne turns 18, any assets or funds held in trust will be distributed to her.

When Queensland Public Trustee acts as a trustee for a minor, we will consult with the minor’s parent or guardian about the administration of the trust. At times, parents or guardian will want to utilise funds held in the trust for the benefit of the minor. Generally, trust funds can be used for the maintenance, benefit and advancement of the minor which can include using funds for things like educational, medical, or clothing expenses. These are examples and a guardian or parent can contact us for further information about the use of the funds held in trust.

Queensland Public Trustee invests assets held in trust based on financial advice - taking into account a range of issues and circumstances. The type of trust involved, the terms of the trust, the assets and value of the trust and, the beneficiaries of the trust, will influence investment strategies.

Advice about the investment of assets in the trusts will be sent out to the beneficiaries, their representative or the guardian/parent for review. If you have any questions about how we invest for our customers, you can have a look at how we invest for our customers or contact one of our customer team members.

Yes, the parent or guardian of a minor and, beneficiaries or their representative, will receive regular statements of account which detail financial transactions for the period of the statement and include a list of current assets.

We will be sending you out some information and asking you to complete and return some forms for us. It is important that you don’t complete those forms before you turn 18. If you need any further information, please contact one of our customer team members.