Discretionary Trust for Dummies

Hey there! So, a discretionary trust is like a special kind of pot of money or assets that someone, usually called the trustee, looks after for the benefit of other people, who are called the beneficiaries. What's great about a discretionary trust is that the trustee has the discretion, or the freedom to decide, how to distribute the money or assets to the beneficiaries. This means that they can use their own judgment to figure out who needs the money the most, or who would benefit the most from it.

So, let's imagine it like this - think of the discretionary trust as a big, shiny treasure chest full of gold coins. The trustee is like the keeper of the treasure chest, and the beneficiaries are the adventurers who get to share in the treasure. But the cool thing is that the trustee gets to decide how many coins each adventurer gets, based on who needs it the most, kind of like a captain deciding how to divide up the loot with the crew.

Now, there are a couple of definitions of discretionary trust, so let me break it down for you. First, there's the financial meaning, where it's like a pot of money or assets that the trustee gets to decide how to distribute to the beneficiaries. But there's also a legal meaning, where a discretionary trust gives the trustee the power to manage the trust and make decisions about how to use the money or assets for the benefit of the beneficiaries.

So, there you have it - a discretionary trust is like a treasure chest where the trustee has the power to decide how to share the treasure with the beneficiaries, based on who needs it the most. It's a pretty neat way to look after and distribute money or assets for the benefit of others!