Discretionary Trust in United Kingdom

Definition of Discretionary Trust

In accordance with the work A Dictionary of Law, this is a description of Discretionary Trust : A trust under which the trustees are given discretion as to who, within a class chosen by the settlor, should receive trust property and how much each should receive. A settlor must give some indication as to the limits of the class of people he intends to benefit, but the trustees do not need to have an exhaustive list. A beneficiary under a discretionary trust has no enforceable right to any part of the property or its income, although the trustees must consider his claims together with those of the other beneficiaries. Such trusts are often very difficult to distinguish from *trust powers and *powers of appointment held by *trustees. Discretionary trusts have been invaluable in planning to mitigate liability to tax, but recent fiscal legislation has reduced their advantages.