What is an interest in possession trust?

Prepare for the ATT Law Exam. Practice with multiple choice questions, each providing hints and explanations. Be well-prepared for exam day!

An interest in possession trust is defined by a present entitlement for a beneficiary to receive income from the trust or to enjoy the use of the trust property as it arises. This means the beneficiary has a current right to the income when it is earned, or to use the asset now, rather than waiting for a future date or relying on discretionary decisions. That is why the description of immediate entitlement to the net income produced by the trust property as it arises or immediate enjoyment of the use of the trust property best captures the concept. If the beneficiary had no current right to income until the trust ends, or if the property were held in a way that resembles co-ownership with the trustees, or if the settlor retained control, those situations would not fit an interest in possession. The key is the present, automatic right to income or use.