A ‘sub-fund’ of a trust is said to exist when a specific asset (or specific assets) of the trust are held subject to separate and distinct trust provisions to those applicable to the other assets of the trust. A trust may have any number of sub-funds. Normally, the same persons are trustees of all the trust property, but it is possible for separate trustees to be appointed for one or more of the sub-funds.

For example, suppose the trustees of a discretionary trust use part of the trust fund to acquire a property for occupation by one of the beneficiaries. The trustees exercise their overriding powers under the trust to give the beneficiary an interest in possession in the property, and a right to occupy it during their life, for so long as they wish to do so. On the termination of this interest, the original trust provisions will apply to the property, ie it will be held subject to the original discretionary trusts. The trust of the property can be referred to as a ‘sub-fund’ of the