Case Study:
Green Vitality’s Trust Structure

Company Overview
Green Vitality is a family-owned business, founded in 1998, that specializes in organic supplements derived from locally-grown plants. The company has flourished in the sports and fitness industry, positioning itself as a trusted provider of natural health solutions. As the company grew, the founders wanted to establish a long-term strategy for managing the company’s assets and ensure the continued financial support of their family and future generations.

The Problem
The founding family needed a way to distribute ownership and manage assets that balanced fixed entitlements with flexibility for unforeseen future circumstances. They wanted a structure that would guarantee the financial security of some family members while allowing for flexibility in the allocation of resources for others based on need.

The Solution: Establishing Fixed and Discretionary Trusts
Green Vitality’s founders set up two types of trusts: a Fixed Trust for key family members and a Discretionary Trust for younger family members and future generations.

Fixed Trust for Immediate Family

The fixed trust was established to ensure that the company’s immediate family members, such as the founder’s spouse and adult children, received a guaranteed share of Green Vitality’s dividends and profits. The trust was structured as follows:

• Trust Property: 30% of Green Vitality's shares and future profits were placed into the fixed trust.

• Beneficiaries: The founder’s spouse and two adult children were named as the beneficiaries, each receiving a defined portion of the trust's income annually.

• Terms: The trust guaranteed that the spouse would receive 40% of the annual income, with the two children equally dividing the remaining 60%.

This fixed structure ensured that the beneficiaries had a predictable, stable income, giving them financial security while preventing disputes over the company’s distribution of profits.

Discretionary Trust for Future Generations

In parallel, the founders set up a discretionary trust for younger family members and future generations who might not yet be ready to manage significant assets on their own.

• Trust Property: The remaining 20% of Green Vitality’s shares and a portion of its accumulated profits were allocated to the discretionary trust.

• Beneficiaries: The beneficiaries were the founders’ grandchildren and any future descendants.

• Trustees’ Role: The trustees were given full discretion to decide how much of the trust income would be allocated to each grandchild. They were empowered to assess the personal circumstances of each beneficiary, such as educational expenses, health issues, or financial need.

The discretionary trust allowed the trustees to remain flexible and adaptable to future circumstances. If one grandchild required financial assistance for medical reasons, for example, the trustees could allocate more funds to them while preserving the balance for others who may not yet need it.

Results
By setting up these trusts, Green Vitality was able to:

• Ensure Financial Stability: Immediate family members had secure, fixed income from the company’s profits, reducing the risk of family disputes.

• Provide Flexibility: The discretionary trust gave trustees the ability to support family members based on their current needs, offering a tailored approach to managing wealth.

• Maintain Control: The legal title of all the trust assets remained with the trustees, ensuring professional and responsible management while protecting the beneficiaries from potential mismanagement.

Conclusion: Green Vitality’s dual-trust structure allowed the company to balance the financial security of key family members with the flexibility to support future generations. This hybrid approach ensured that the company’s profits were distributed fairly and responsibly, preserving family wealth for the long term.