Discretionary Trusts, WillPack, House, Money, Table

Discretionary Trusts

By | Property, Trustees, Trusts | No Comments

The Discretionary Trust is a common Trust for a Testator to use for their children to ensure that they do not inherit directly from their estate. The reasons for this can vary, for example, protecting assets from potential divorce, drinking or gambling issues, or the testators may wish that their assets are distributed in a particular manner or at certain points in their children’s lives that are outside the capabilities of the Will itself. This type of trust is effective because the assets are held and managed by the Trustees to distribute to the beneficiaries at their own discretion, hence the name of the trust and just because a beneficiary is named under the trust does not mean that they are absolutely entitled to any assets – useful where the Trustees may have concerns over how the money may be used.  Where beneficiaries are named under the Trust; this can…

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General Discretionary Trust

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A General/Standard Discretionary Trust has a wide range of uses from protecting assets from the beneficiaries themselves, or third parties seeking money from the beneficiaries. As the assets are held by the Trust, it is out of direct reach of the beneficiaries and is not considered as part of their estate. However, for the Trust to work in this way, there must be more than one beneficiary of the Trust, otherwise the assets are deemed to be owned by that one beneficiary, making this level of protection ineffective. The General Discretionary Trust is useful for making provisions for a dependant, or any other person(s) who could claim under the Inheritance (Provisions for Family and Dependants) Act 1975, without them directly inheriting. This reduces the risk of a successful claim against the estate. This could, however, leave the Trustees in a difficult position of being pressured by this beneficiary. The Trust…

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