The process of choosing the right kind of trust for you can be confusing. If you want to protect the beneficiary’s interest from his own improvidence or to just give wiggle room for changing circumstances, one excellent option is the discretionary trust.
A discretionary trust is one in which the beneficiary doesn’t have a right to income until the trustee decides to pay it. It’s a good option mainly because we can’t predict the future. There are all sorts of circumstances that you might not anticipate while you’re alive, and many practitioners advise their clients to give the trustees plenty of discretion and the ability to change course depending on what ensues. For example, though we all expect the best futures for our children, we might not want to write a trust that instructs a trustee to turn all of the money over to them when they reach a certain age. They could be too immature to manage their money wisely at the set age. They could be a spendthrift. Although it’s a sad and disturbing thought, they could have a gambling problem or a drug addiction. In all of these circumstances, we would not want the trustee’s hands to be tied. The key to discretionary trusts is to allow the trustee to exercise his judgment while following certain guidelines. Practitioners often advise clients to draft a letter intended to guide the trustee.
To learn more about discretionary trusts or discuss your estate planning needs, contact the experienced attorneys at Fields & Dennis, LLP at 781.489 6776.