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In the United Kingdom, five main types of trust have developed:
- Interest in possession trust.
Interest in possession trusts (sometimes called "life interest trusts")
are often created as part of wills and are structured in such a way
that the surviving spouse, or "life tenant", will have a right to
receive an income for the rest of his or her life, or for a fixed
period at least.
- Accumulation and Maintenance trust.
"A&M" trusts arose in the 1970s because of changes to UK tax law.
They exist for young beneficiaries and give the trustees discretion to
pay money for their benefit. Until recently they have enjoyed special
tax treatment, but the Finance Act 2006 changed this.
- Discretionary trust.
Trustees of a discretionary trust can often choose the beneficiaries,
based on a "class" specified by the settlor. Alternatively, they may
have a fixed group of beneficiaries to choose from, but they can decide
which beneficiaries (if any) are to benefit and to what extent, so long
as the decision is based on the beneficiaries' best interests.
- Bare trust.
Where there is a bare trust, the trustees can deal with the property as
usual but the beneficiaries have an absolute right to demand any or all
of the property at any time. The trustees are therefore mere agents of
the beneficiaries. In the USA the term simple trust is used (see below).
- Charitable trust.
Charitable trusts have a unique position in English law. They have
special tax advantages, they do not have to end after a certain period
of time (unlike other types of trusts), they will not be void if their
objects are uncertain. They encourage charitable giving.