The beneficiaries are the people (including entities) for whose benefit the trustee holds the trust property. A discretionary trust often has a wide range of beneficiaries, including companies and other trusts.
The beneficiaries of a discretionary trust do not have an interest in the assets of the trust. They merely have a right to be considered until the trustee exercises its discretion to make a distribution.
There are typically two types of beneficiary to a trust:
- A primary beneficiary is any entity that is named in the trust deed when it is created. These are entities specifically nominated to receive trust funds from the trustee.
- A ‘general’ beneficiary is typically a related entity to a primary beneficiary and can include grandparents, parents, siblings, children, stepchildren, grandchildren, nieces and nephews, cousins, etc.
This also includes any of the above related to the spouse of a primary beneficiary.
The trust deed also allows, by default, any further trusts (including superannuation funds) and companies associated with any of the beneficiaries, along with employees of the trust and charities, churches, etc to be a beneficiary.