What is a fixed trust

A fixed trust, also known as a non-discretionary trust, is a type of trust structure in which a person or entity controls money and assets for the benefit of the appointed beneficiaries. This type of trust is often set up by settlors, who have chosen to have overall control of who the beneficiaries of the entity will be. In this particular instance, the trustee plays a minimal role in the administration and management of the trust.

Fixed Trust Explained

A fixed trust allows the settlor to determine the entitlement of the beneficiaries, and permits the settlor, who is the individual responsible for the formation of the trust, to have beneficiaries fixed to the trust. This ultimately means that unlike many other types of trust structures, the trustee has little or no discretion when it comes to deciding on the beneficiaries and their entitlement. To contrast, in traditional trust structures, the trustee plays a greater role with regards to managing and administering the trust.

The main examples of fixed trusts are where the trust is set up for future generations. With a fixed trust, there is no restriction with regards to the number of beneficiaries that a settlor can choose to benefit from the trust assets.

One of the main advantages of setting up a fixed trust is that the settlor can decide who will receive his or her assets, and by how much, as once the beneficiaries are named in the trust deed this cannot be altered.

It is important to be aware of the available types of trust structures that your chosen jurisdiction offers and by what name the trusts go under. This is because in certain countries, fixed trusts are known as non-discretionary trusts.