Discretionary Trusts
Where you wish to ensure your Trustees will have flexibility in managing assets you leave, on behalf of your beneficiaries!
The Trustees of any Discretionary Trust are appointed to decide how to use/distribute the income and assets of that trust, for the benefit of your chosen beneficiaries.
The Trustees may be obliged to use an amount of that income for the benefit of named beneficiaries, but they are at liberty to decide:
• The amount that is paid
• How frequently payments are made
• To which beneficiary those payments are made
• What conditions might be appropriate to impose upon the recipients
Trustees may, for as long as the law allows, accumulate income within the trust rather than pass it to the beneficiaries. Any accumulated income then becomes part of the capital of the original trust.
A facility may also be available whereby the Trustees may lend capital/assets to certain individuals, or beneficiaries; with or without the application of interest charges. The latter option may assist in mitigating future potential Inheritance Tax charges after the death of a surviving spouse.
A letter of wishes to the Trustees is usually prepared to be retained with your Will, providing guidance on how you would like the Trust funds to be used and/or distributed, after your death. However, this can only be a guide, since your Trustees must be allowed the discretion to make such decisions; which can be of particular benefit, in case tax rules or other legislation changes after your death.
