What are discretionary trusts?
We’re talking about trusts.
Not the trust built two people (although that is important too!)
But trusts as an estate planning tool.
Trusts have no legal definition. It’s when a settler leaves assets to another party (beneficiary), with a 3rd party (trustee) responsible for distributing the assets.
Discretionary trusts is where the trustee can use discretion to distribute the assets – to whom, how, when.
A couple of trust facts:
- For tax purposes, trusts are treated as a person.
- To create or settle a trust, you need to transfer a physical object to the trustee (e.g. a coin, $5 bill).