What is a discretionary trust
A discretionary trust is a legal arrangement where a trustee is given the discretion to decide how to distribute the trust's assets to the beneficiaries. In this type of trust, the trustee has the power to decide which beneficiaries will receive income or capital from the trust, as well as how much they will receive and when they will receive it
The terms of the discretionary trust are set out in a trust deed, which typically specifies the identity of the beneficiaries and the conditions under which they may receive distributions. The trustee has a duty to act in the best interests of the beneficiaries, but they have broad discretion in deciding how to distribute the trust's assets
Discretionary trusts are commonly used for estate planning purposes, as they allow the settlor to provide for their beneficiaries while retaining control over how the assets are distributed. They can also be used for asset protection, as the assets in the trust are generally protected from creditors and other legal claims. Additionally, discretionary trusts can be useful for tax planning,
as they may be subject to lower tax rates than individual beneficiaries, depending on the jurisdiction in which the trust is established
