4 Advantages of Discretionary Trusts

Discretionary trusts are a type of estate planning tool that can be used in order to provide for your beneficiaries after you are gone. This type of trust puts more power into the hands of the trustee than other types of trust arrangements. Here are some of the advantages of using discretionary trusts.

1. Provide Guidelines

With this type of trust, the grantor will select a trustee that will be in charge of the assets. The trustee will make decisions about all asset distributions. The grantor will be able to set up specific guidelines for the trustee to follow. The grantor can choose beneficiaries and they can set up a guidelines that will help the trustee make their decisions. For example, if you had a young beneficiary, you could say that you want the trust to be able to provide assets to help with their education. You would then leave it up to the trustee to decide how to further their education.

2. Avoid Tough Decisions

Some people are just not interested in making tough decisions when it comes to distributing property to their beneficiaries. They may have trouble deciding exactly what property should go to whom. With the discretionary trust, you can avoid making these tough decisions but you can still provide something for your beneficiaries. You will be able to choose the beneficiaries and then you can allow the trustee to make the decisions. If you have a sizable estate, this will save you a lot of time and it will make it much easier on you. You know that you will still be able to provide for your beneficiaries, but you can leave the details up to someone else.

3. Avoid Irrelevant Decisions

Many trust arrangement tend to make decisions that seem irrelevant by the time they are enforced. Things change quickly and if you engage in estate planning long before you die, the decisions that you made before your death might not make sense. A discretionary trust gives the trustee flexibility. They can make the decisions that are important when the time comes. This way, you do not allocate too much to the wrong party, or make a decision that does not make sense. With this arrangement, the decisions are made when necessary and all extenuating circumstances can be taken into consideration for the smartest decision.

4. Avoid Probate

Another one of the big advantages that this tool provides is that you can help your family members avoid probate. If you were not interested in making specific estate planning decisions and you simply did nothing, all of your assets would have to go through the probate process before they could be distributed. This can eat into the estate with legal fees and the process can take a long time before your family is able to have any access to your money. With the discretionary trust, you can avoid this process and leave it up to a trustee.

blog comments powered by Disqus