Is it worth setting up a discretionary trust?
Is it worth setting up a discretionary trust?
A discretionary trust is extremely useful if you are not exactly sure how you want to distribute your estate or if it could be influenced by circumstances you can’t be sure of when making your will.
What is the difference between a fixed trust and a discretionary trust?
Normal express trusts are described as “fixed” trusts; the trustees are obliged to distribute property, with no discretion, to the fixed number of beneficiaries. Discretionary trusts, however, are where the trustee has discretion over his actions, although he is obliged to act.
How long does a discretionary trust last?
Discretionary trusts can run for up to 125 years, so there is plenty of scope to skip one or more generations if appropriate.
What happens to a discretionary trust when you die?
The Discretionary Trust automatically makes you a trustee. CAN I APPOINT ADDITIONAL TRUSTEES IN THE FUTURE? Yes, with our Discretionary Trust the settlor has the power to appoint additional trustees at any time. After you die, the trustees will have the power to appoint additional trustees.
Can I cancel a discretionary trust?
A discretionary trust is a legal arrangement which allows you to set aside assets, such as property and money, for the benefit of people you choose as ‘beneficiaries’. Once you have created a discretionary trust, it is unlikely that you would be able to cancel it or to revoke any assets placed in it.
Can you challenge a discretionary trust?
One of the ways in which a beneficiary of a discretionary trust may look to challenge the exercise of the trustees’ discretion is to request information and documentation in relation to the trust and the decisions which have been made in relation to the distribution of the trust fund.
What is the point of a discretionary trust?
A Discretionary Trust allows you to put some or all of your Estate into a Trust, which can then be distributed to all or any of your beneficiaries by your appointed Trustees when they feel it is appropriate.
How does a discretionary trust work?
A Discretionary Trust is a legal arrangement which allows the owner of a life policy (the settlor) to give their policy to a trusted group of people (the trustees), who look after it. At some time in the future they pass it on to some people from a group that the settlor has decided (the beneficiaries).
What happens when a trustee of a discretionary trust dies?
WHAT HAPPENS IF A TRUSTEE DIES? If a trustee dies, the remaining trustees can still carry on with the role, but a replacement could be appointed. If the trustee was the last surviving trustee, their legal personal representatives will have the power to appoint additional trustees or take over as trustees themselves.
Can a settlor benefit from a discretionary trust?
As a result, the settlor is excluded from all benefit under the Discretionary Gift Trust. However, the settlor can retain considerable legal control over who benefits from the trust fund during his or her lifetime. This is because, as well as being one of the trustees, the settlor is also the appointor under the trust.
What happens when a settlor of a discretionary trust dies?
A discretionary trust is one where the Trustees have full discretion on who will benefit and when. However, the Settlor has full access to the trust fund during his or her lifetime. On the death of the Settlor, the trust fund is held under a discretionary trust for the benefit of the discretionary beneficiaries.
Can you challenge a trustee?
Even if a trustee is removed under s. 36 Trustee Act 1925, it is entirely possible that they could challenge such a decision by way of court action. (b) the beneficiaries under the trust are of full age and capacity and (taken together) are absolutely entitled to the property subject to the trust.
Can a beneficiary Take a trustee to court?
Yes, a beneficiary can sue a trustee. But a beneficiary must prove that a trustee has breached their fiduciary duty. To mount a legal challenge, a beneficiary must show that there was malfeasance, conflict of interest or incompetence on the part of the trustee.
Who benefits from a discretionary trust?
When you set up a Discretionary Trust, you identify a class of beneficiaries such as children and/or grandchildren who can receive capital and/or income from the trust at the discretion of the Trustees. No one beneficiary has an absolute entitlement to either income or capital.
Can a discretionary trust be Cancelled?
Can a trustee remove themselves from a trust?
Yes, a trustee can be legally removed. California Probate Code §15642 allows a trustee to be removed in accordance with the trust instrument, by the court on its own motion, or on petition of a settlor, co-trustee, or beneficiary.