What Are Discretionary Trusts?

Discretionary trusts are a type of trust arrangement commonly used in estate planning to give the trustee more power. Here are the basics of discretionary trusts.

Discretionary Trust

A discretionary trust allows the trustee to make certain decisions about the assets within the trust. Under a discretionary trust, the trustee is going to be able to decide how much to pay a beneficiary.

Implications

When you are planning your estate, if you want to utilize a discretionary trust, you are going to have to think about several things. First of all, you are going to want to make sure that you choose a trustee that is going to make decisions based on what they think you would do. You are going to designate the beneficiaries of the trust, but you are going to leave it up to the trustee to decide how and when to give them their inheritances. Many times, your beneficiaries are going to need to be taken care of with money from your estate. Therefore, if you want to make sure that everyone is taken care of properly, you want to choose the right trustee for the job.

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