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Trading income for trusts

Trustees may be required to run a family business for the benefit of others, or they may decide to invest the trust fund in a business activity. In most cases, such a business will be in the form of a company in which the trustees hold shares so that the trust income arising from it will be in the form of dividends or interest. However, it is possible for trustees to be in receipt of income from an unincorporated business which they own. Some of the situations which might arise are:

1. •

   a deceased testator leaves his professional practice on trust to provide an income for his spouse. See Example 1

2. •

   a trust is created for the farming activities and other commercial interests of a complex landed estate. See Example 2

3. •

   trustees with residential property holdings may decide that the best way of maximising the fund for beneficiaries is to engage in property development. See Example 3

The trading activity need not be long term or substantial. It