Define: Complex Trust

A complex trust is a type of trust arrangement that includes various provisions and features beyond the basic trust structure. Unlike a simple trust, which typically distributes all income to beneficiaries and does not retain earnings, a complex trust may accumulate income, distribute income at the trustee’s discretion, or retain assets for future beneficiaries. Complex trusts often involve multiple beneficiaries, different types of assets, and intricate distribution rules. They may also incorporate tax planning strategies to minimise tax liabilities for both the trust and its beneficiaries. Complex trusts are commonly used for estate planning purposes, charitable giving, asset protection, and managing family wealth across generations. Due to their complexity, complex trusts require careful drafting and administration to ensure compliance with legal requirements and achieve the desired objectives.

A trust that can perform certain activities that a simple trust cannot, such as making tax deductible contributions to charities, retain trust income, and make tax deductible distributions to the trust’s beneficiaries.

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This glossary post was last updated: 29th March 2024.