The term "Hybrid Trust" does not refer to one particular type of structure. There are many types of hybrid trusts. Indeed, "Hybrid Trust" means different things to different people. The Topdocs hybrid trust is described here.
1. Establishing the trust
The Topdocs version of a hybrid trust is established by the settlor transferring the settled sum to the trustee in consideration for the issue of the initial units to the initial unit holders.
2. Income Streaming
"Class of income" means the whole or any part of the income of the Trust Fund of a Financial Year which may be differentiated from any other part of the income of the Trust Fund of the Financial Year by reason of:
- the nature of the income;
- the source of the income; or
- the means of derivation of the income.
The Trustees may decide the classes of income which apply in each Financial Year and divide the classes of income into:
- dividend income which carries income tax credits;
- dividend income which does not carry income tax credits;
- interest income;
- net capital gains; and
- any other form or type of income.
"Beneficiaries" means all the discretionary Beneficiaries of each Class of Units and "Beneficiary" shall mean any one of such Beneficiaries; The “Discretionary Beneficiaries of each Class of Units” can include the Unit Holder(s), charitable bodies, persons, trusts or corporations related to the Unit Holder(s).
4. Unit price
When the Topdocs hybrid trust is set up, the unit holders receive units in consideration of the settlor paying the settled sum. So there is no unit price that applies to those units. If a unit holder later invests in the hybrid trust, then they can be issued units in consideration of their investment (and a price can be set then).
5. Classes of Units
There are a number of unit classes equal to the number of unit holders. Each class of beneficiaries is defined by reference to their relationship with the relevant unit holder.