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Difference between discretionary and fixed trust


In a discretionary trust for the beneficiaries, the title on the right of income to income does not appear from the moment the trust was established, because trusts can actually not pay any income to an individual beneficiary - this is his right. You can’t do anything with this, because your founder created a trust according to this model. And your title to the right to receive income appears only at the time of income distribution, when the trust actually makes a decision on the payment of income, because you belong to a certain circle of beneficiaries. Therefore, it is quite difficult to determine the circle of beneficiaries in advance and say that you have the right to receive income from discretionary trusts. And English lawyers believe that this better protects the interests of the beneficiaries, including if someone disputes the right to receive income or apply for income. Because the existence of such a discretionary trust and a trust agreement does not guarantee that you will ever receive income from this trust. Here you can’t say in advance that you have any rights.When concluding a trust agreement, the founder can give the trust a letter of wishes, where he says that he, for example, would like the income to be allocated in equal shares to the first-stage beneficiaries. But there will always be a reservation that the final decision rests with the trusts and will be made at its discretion.(at his discretion). This, in fact, is only a wish, and a trust is not required to follow it. But, as a rule, trusts follow him, because their goal is to manage the trust in such a way as that the founder wanted. Therefore, such letters are taken into account. More info here - https://en.wikipedia.org/wiki/Discretionary_trust


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