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This type of trust exists when a beneficiary, known in this case as an income beneficiary, has a current legal right to the income from the trust as it arises. The trustees must pass all of the income received, less any trustees' expenses and tax, to the beneficiary.
A beneficiary who is entitled to the income of the trust for life is known as a life tenant or as having a life interest.
The income beneficiary need not, and often does not, have any rights over the capital of such a trust. Normally, the capital will pass to a different beneficiary, or beneficiaries, at a specific time in the future or after a specific future event. Depending on the terms of the trust, the trustees might have the power to pay capital to a beneficiary even though that beneficiary only has a right to receive income.
A beneficiary who is entitled to the trust capital is known as the remainderman or the capital beneficiary.
Learn more about Fixed Fee Trusts with our Trust FAQs.
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