Irish Trust Structures

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​Discretionary trust: A discretionary trust entrusts the trustees with absolute discretion to manage the trust assets in accordance with the terms of the trust deed or will trust. A protector may also be appointed to the trust by the settlor. A trust protector is a third party - usually a lawyer - who is entrusted with oversight of the trustee under the terms of the trust and the general law. His or her role is to ensure that the trustee's decisions are in the best interests of the beneficiaries and he or she is empowered to modify the terms of an irrevocable trust to ensure compliance with the settlor's intend. Although discretionary trust tax applies to discretionary trusts - both a one-off charge of 6% and an annual charge of 1% - there are a number of exemptions from the tax charge including for trusts set up for individuals who are incapable of managing their own affairs because of age, improvidence or physical or mental or legal incapacity.​

 

Purpose trust: A purpose trust exists to promote a partuclar purpose. IThe trust may be for the benefit of a person or a class of persons.   Where a trust also has a charitable purpose, the purpose trust will be enforceable. However, where a purpose trust has the potential to exist in perpetuity, and thereby tie up a  property, it will not be enforceable on grounds of public poicy.   This rule continues to apply notwithdstanding the abolition in Ireland of the rule against perpetuities. A trust, to be enforecable must meet three certainties: certainty of intention, certainty of subject-matter and certainty of objects.  Purpose trusts may be avoided on the grounds of uncertainty. However, there exist a number of exception to the invalidity of purpose trusts:  trusts for the maintenance of graves and tombs, trusts for the maintenance of animals and trusts for the benefit  of a particular company, club or association.Fixed interest trust:

 

Fixed Income Trust: In a fixed income trust, each beneficiary has a fixed entitlement to a specific share of or interest in the assets owned by the trust.  This is known as an ‘interest in possession’ – a present right as opposed to a contingent or future right.  A common example of a fixed income trust is a life interest under which the tenant is entitled to the income from the trust for life: upon his (the life tenant's death)  the remainder (the capital)  is paid over toe a remainderman (the ulitmate beneficiary).

 

Accumulation and maintenance trust: Accumulation and maintenance trusts are hybrid trusts combining the features of a discretionary trust and an interest in possession trust, Such trusts are frequently estabished by parents with a view to making provision from the capital fund for the maintenance, eduation or benefit of the beneficiaries or by accumulating the capital until the intended beneficiaries reach a specified age, at which point, the beneficairy become absolutely entitled.​

 

Orphan trust: An orphan trust is typically used in commercial or structured finance transactions.  The notional equity of the SPV formed to isolate risk is assigned to an unconnrected third party who themselves have no control over the SPV; thus, the SPV becomes an "orphan" whose equity is controlled by no one.