Discretionary Trusts may be created on death or during your lifetime, an example of which could be a Family Trust. They are typically used where the Settlor wishes the Trustees to have maximum control over who will benefit and when.
A Discretionary Trust would be used if you are not sure how you want to distribute your Estate and who the absolute beneficiaries should be. When setting up the Trust, you will specify which assets from your Estate should be included in the Trust and the names of potential or ‘Class’ of beneficiaries. You then give power to your Trustees to decide how and when the Trust is going to be distributed and to whom.
There are many reasons why this can be a good idea, examples could include: if one of your children is vulnerable, or perhaps has relationship issues or financial issues and so this could make you reluctant to leave them significant amounts of money. A Discretionary Trust allows the Trustees to defer rights to the assets until such a time as they feel it is more appropriate.
The Settlor may provide the Trustees with an expression of wishes which can guide them in how to apply their discretionary powers. The expression of wishes is not legally binding but can provide clear guidance to the Trustees.
Trust planning is complex, and we strongly recommend that you contact us for further guidance.