A Discretionary Trust is a very flexible Trust leaving considerable discretion to the Trustees as to whom amongst a defined group will benefit, and how they will benefit, from the Trust.
A Discretionary Trust involves the creation of a category of potential beneficiaries all of whom MAY benefit if the Trustees choose, but none of whom are ENTITLED to receive a particular share of the Trust money. For this reason the assets of the Trust are not taken into account when assessing the entitlement of a beneficiary to means tested benefits.
The particular advantage of Discretionary Trust is flexibility, allowing Trustees to make choices and decisions as the needs of the potential beneficiaries unfold throughout their lifetime. At the heart of such a Trust is often a vulnerable or disabled person. Typically those setting up the Trust write a Letter of Wishes to the Trustees expressing a wish that a particular individual should be preferred for financial support. Trustees can enhance the life of a disabled person receiving means tested benefit, without such benefit being lost. They may for example pay for holidays, leisure opportunities, alternative therapies, equipment or care.
An essential element of a Discretionary Trust is that more than one beneficiary is identified, otherwise it would not be possible for Trustees to exercise discretion, and choice. The group of potential beneficiaries may also include charities. It generally includes other family members.
It is always important to consider Tax implications when choosing a particular style of Trust.
For further information regarding any of the above or for a free, no obligation discussion please contact us by email on firstname.lastname@example.org or call us on 028 9024 3901.