Trusts are a common estate planning tool. Most people use trusts to have more control over the transfer of their wealth and assets and to avoid probate. When it comes to trusts, there are several different types. One common type is the discretionary trust. How a discretionary trust differs from other trusts is that it gives more control to the trustee.
In this type of trust, the trustee has control of the assets and can make decisions about the distributions. If you are curious as to why people choose this type of trust, here are two main benefits of establishing a discretionary trust.
Allows for More Timely Decisions
When you make your estate plan, you have no idea what is going to happen in the future. Beneficiaries might change, circumstances might change too. For instance, you may have kids in college when you make your estate plan, then fail to update it when they are through with their education. If this happens, your trust would provide for an education that your children do not need. There can be a lot of different extenuating circumstances that might impact your decision when it comes to how you want to disperse your assets and wealth. A discretionary trust allows the trustee to take all of those circumstances into account.
Allows for Guidelines Without Strict Details
As the grantor of the trust, you are still allowed to set guidelines. While the trustee is the one who is ultimately going to be in charge of the trust, you can still put guidelines into place. You still have an option to choose your beneficiaries and set up any rules regarding those beneficiaries that you want to. For instance, if you want to leave money for your child’s education, you can make it clear how you want the money to be spent. Then, the trustee would have control over determining how much money to allocate to education and what counts towards your child’s education.
When you choose to have a discretionary trust, there is one important rule to remember. You have to be able to trust that your trustee will act on your behalf and make decisions that you would feel most comfortable with. For some people, a discretionary trust can make the process simpler. If you are ready to update or start a new estate plan, you can learn more by consulting with an estate planning lawyer, such as from Wiseman Bray, PLLC.