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2018-06-07
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The 'settled sum' is demonstrative of trust assets and reflects the exchange of these assets to be held on trust by the trustee. In most cases, once a bank account is created, the settled sum will be the first deposit into the account.
Unit trusts, as separate legal entities, are not like companies or individuals. For the trust to be effective, the Settler pays the Trustee an amount called the Settled Sum. The Trustee holds this property, along with any other agreed property or finances in accordance with the provisions of the Trust Deed.
A Unit Trust holds assets or is used to trade through. A Unit Trust apportions trust assets according to 'units'. As a Unit Holder, you get beneficial ownership of trust property according to the number of units you own. For example, what if you have 150 units and I have 50 units.
The beneficiaries of a trust do not share trust losses. Instead, losses incurred by trusts are trapped in the trust. Similar to company losses being trapped in a company. Trust losses are carried forward and may be offset against future trust income if the trust loss provisions allow that.
A company can retain profits at the company tax rate of 30%. Any undistributed income in a unit trust is taxed at the top marginal rate of 49%. A unit trust can access the 50% capital gains discount for assets held longer than 12 months, companies can't.
A settlement in trusts law is a deed (also called a trust instrument) whereby real estate, land, or other property is given by a settler into trust so that the beneficiary only has the limited right to the property (for example during their life), but usually has no right to transfer the land to another or leave it in
A simple estate or trust can often be settled within a few months, while a complicated estate or trust can take one or more years to close.
A settlement Settlements may involve written agreements or deeds. Trusts are a common type, but a settlement can also be a disposition, covenant or agreement. However, there doesn't have to be a deed and so settlements can also include an unwritten arrangement or even a straightforward gift or transfer of property.
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