Discretionary Trusts:

A Discretionary Trust enables assets to be given away without actually giving to any individual.

They have been a feature of UK Trust Law for very many years, and much of the aristocratic wealth in the UK is held in such Trusts.

This is not really for tax reasons but to enable Estates to be protected from spendthrift beneficiaries.

The assets are held by Trustees who have discretion to give the assets or the income from the assets to any one of a class of people named in the Trust Document.

These people are called the beneficiaries and the class described in the Settlement Deed is normally very wide - often expressed as the descendants of grandparents, but a spouse cannot be included while the donor is alive. It is in order to have a widow as a beneficiary.

The Trustees have complete discretion on how the assets and the income is to be dealt with amongst the named class of beneficiaries.

It is, therefore, important to choose the Trustees with care, although it is perfectly in order for the donor, i.e. the person putting the assets into the Trust, to be one of the Trustees. 

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