We often get questions from our clients about Discretionary Trusts, and what the benefits of them are. Trusts are a great way for you to plan and protect your assets, and Discretionary Trusts are used by many people for different reasons.
To put it simply, a Discretionary Trust gives the trustees the ability to control and make decisions about how best to use and distribute the trust assets in the interest of the beneficiaries. A trustee is someone that you appoint to have responsibility and legal
control over the trust, and the beneficiaries are those you want to benefit from your assets.
When setting up a Discretionary Trust, you establish a group of people you want to name as
beneficiaries, for example your children or grandchildren. This means that they will be set to inherit from you even if they aren’t yet born at the time of setting up the trust. This is one of the reasons why people may opt for a Discretionary Trust.
So, what decisions can the trustees make? It depends on the trust deed, but generally they can decide what gets paid out, what beneficiaries to make payments to, how often to make payments, and any conditions to impose on beneficiaries. Because of this, Discretionary Trusts are a popular option for those who have loved ones who aren’t great with money or need assistance with money management.
We have had many clients come to us wanting to create a Will but are worried about their child who struggles to manage their finances. Understandably, this can make you reluctant or apprehensive to leave a significant amount of money to them in concern they might be
irresponsible with it.
A Discretionary Trust can be a good course of action if you’re facing this predicament as the trustees can decide when the beneficiaries get access to the assets, how much, and how often. It can really give peace of mind to a lot of our clients. If you’d like to learn more about Discretionary Trusts, get in touch today.