Standard Unit Trust
Standard Unit Trust
The following parties are involved in a unit trust:
TRUSTEE
This entity, either one or several individuals or a company, is charged with the responsibility of administering the Trust, including investing the Trust Funds and deciding to whom the distribution of trust income is to be made. Any decisions made by the Trustee should be minuted and retained with the records of the Trust.
The assets of the Trust are held in the name of the Trustee - in its capacity as Trustee for the Trust.
The Trustee may resign from its role by tendering its resignation to the unit holders.
UNIT HOLDERS
The unit holders may consist of one or more entities - which may be individuals or companies. It is common for unit holders to be trustees of family trusts.
In the standard unit trusts, units have not been divided into classes - although the trustee has the power to do so.
There can be many advantages in classifying the units in a unit trust. It can allow for a more precise regulation between the unit holders (for example, a quorum for a meeting of unit holders may need to comprise one person representing the A Class unit holders and a second person representing the B Class unit holders; etc). additionally, special rights can be attached to classes of units.
The most popular right is for there to be a class of unit to which is attached discretionary income rights. This enables the Trustee of the unit trust to distribute income at the Trustee's discretion to one, some or all of the holders of such units, in priority to - or ranking behind - the distribution of income to holders of units where the distribution is fixed.
Other rights which may be attached to different classes of units include:-
- voting rights; and/or
- rights to capital distributions
