When setting up a trust, your main goal is typically to be able to distribute assets to your loved ones. However, in some instances, giving said assets outright to your beneficiaries can be more problematic than helpful. You may not want them to receive all of the assets at one time. This is when you may want to choose a discretionary trust. Like all trusts and estate planning tools. It helps to speak with an estate planning lawyer ahead of time to ensure that you are choose the right plan for your circumstances.
What Is a Discretionary Trust?
A discretionary trust provides the trustee with more authority when it comes to the funds that the beneficiaries receive. Unlike other trusts, the funds are not a part of the beneficiaries’ estates and they do not have full rights to said funds. This also means that said funds are protected against an creditors.
In a discretionary trust, you set the ground rules. You can give your trustee guidance when it comes to how the distributions should be made. For instance, you can say that you want the funds only to be used for education, health or maintenance of lifestyle. You can also ask that your beneficiaries receive funds after certain life milestones. For instance, if your son or daughter finishes his or her education, you can provide funds then. This type of trust ensures that your beneficiaries do not receive a lump sum of assets right away.
Why Choose a Discretionary Trust?
The reasons to choose a discretionary trust are simple. It can benefit a lot of people for a lot of different reasons. On one hand, these types of trusts are particularly helpful when you have minor children. Likewise, if you have a beneficiary who has trouble with creditors or may struggle with addiction, this can be a more responsible way to ensure that he or she is taken care of.
If you want to set up a trust for your loved ones, this can be one of the best estate planning vehicles. The type of trust that you set up heavily depends on your estate and your specific circumstances. To find out more about what type of trust is best for you and your family, it’s best to make an appointment with a trust lawyer in Chandler, AZ. He or she will be able to guide you through the process and help advise you on what trust might help you.
Thanks to Citadel Law Firm for their insight into estate planning and discretionary trusts.