Trusts FAQ - What is a unit trust?
Date: March 04, 2011
Q. What is a unit trust?
A. Unit trusts are trusts where the holders of the units of the trust receive income based upon a specific distribution of capital or income according to the number of units of the trust they hold. In a unit trust the entitlement to income and assets is determined according to the number of units each beneficiary holds in the trust. This is a much more rigid structure than a discretionary trust. The trustee has no discretion over the distribution of income and capital to the unit holders. The money or property is held upon trust absolutely for the persons who for the time being are the holders of the units in the unit trust. Units in a unit trust can be redeemed more easily than reducing capital in a company.
