Discretionary trust

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Discretionary trust

In the context of mutual funds, refers to a mutual fund or unit trust whose management decides on the best way to use the assets without restriction to a specific type of security.
In the context of trusts, refers to a personal trust in which a trustee has the power of decision as to how much income or principal each beneficiary receives.

Discretionary Trust

A trust in which a trustee is able to make decisions without the need to consult others. For example, a discretionary trust gives the trustee the right to make significant investment decisions without permission from or even consultation with the trustor or the beneficiary. However, the trustee has a fiduciary responsibility to manage the assets as well as possible; decisions made in a discretionary trust must be made in accordance with the prudent man principle.
References in periodicals archive ?
If it is a discretionary trust which you have set up, or you are aware a trust exists but have forgotten its exact nature, then get in contact with your adviser and ask them to research the position.
Bruce Berlinger appealed an order of the trial court granting Roberta Casselberry's motion for contempt and motion for a continuing writ of garnishment over any disbursements made from the Berlinger Discretionary Trusts to or for tire benefit of Berlinger.
Harvey told the committee: "I don't know who the beneficiaries of this discretionary trust are, no."
It is evident that a loss of creditor protection would occur in a discretionary trust if a dynasty jurisdiction adopts the new position of the Third Restatement.
* Did the Florida Trust Code Overrule Bacardi for Discretionary Trusts? --When Florida enacted the Florida Trust Code in 2006, it included separate statutes for spendthrift trusts ([section][section]736.0502 and 736.0503) and discretionary trusts ([section]736.0504).
In some cases the capital appreciation of an asset held in the Nil-Rate Band Discretionary Trust can outgrow the increase in the Nil-Rate Band.
To avoid this, it is worthwhile considering leaving business assets in discretionary trusts on the first death, so that the proceeds of sale are outside the survivor's estate.
Trustees of discretionary trusts should consider distributing income this year rather than next.
Similarly, total discretionary trusts provide needed protection when an individual cannot hold onto money or has an addiction.
But wills which include nil rate band discretionary trusts can avoid this pitfall.
Discretionary trusts can be a very taxeffective means of ensuring ongoing asset protection, where they are set up to hold shares in privately-owned businesses or partnership interests.
It does not include creating a lasting power of attorney or discretionary trusts.