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Simple English definitions for legal terms
fixed trust
Read a random definition: trust corpus
A quick definition of fixed trust:
A fixed trust is a type of trust where the person who created it (the trustor) decides exactly how the assets in the trust will be distributed. The people in charge of managing the trust (the trustees) have to make sure the assets are doing well financially, but they can't change what the beneficiaries receive. Usually, the beneficiaries get a set amount of money or a percentage of the trust's profits on a regular schedule, like every month or every three months. This is different from a discretionary trust, where the trustees can change how much the beneficiaries get based on their needs or how well the trust is doing. Some trusts are a mix of fixed and discretionary, where the beneficiaries get a set amount but the trustees can change it in an emergency or if things change.
A more thorough explanation:
A fixed trust is a type of trust where the trustor specifies exactly how the assets are to be distributed. The trustee must manage the assets for financial success, but they cannot change what the beneficiaries receive. Fixed trusts usually give each beneficiary a set amount of money or a percentage of the trust profit on a fixed schedule, such as monthly or quarterly.
- John sets up a fixed trust for his children, specifying that each child will receive $500 per month from the trust until they turn 25 years old.
- Sarah creates a fixed trust for her grandchildren, stating that each grandchild will receive 10% of the trust's profits every quarter.
In both examples, the trustor has specified exactly how the assets are to be distributed, and the trustee must follow these instructions. The beneficiaries receive a fixed amount of money on a regular schedule, and the trustee cannot change this amount.
Fixed trusts are different from discretionary trusts, where the trustee has the ability to change the amount the beneficiaries receive based on their needs or performance of the trust. Some trusts may combine aspects of both fixed and discretionary trusts by setting fixed payout schedules for beneficiaries, but the trustees may have the ability to change benefits in the case of an emergency or changing circumstances.