As you consider your estate planning options, you might find that certain types of trusts don’t have the flexibility that you want for your beneficiaries. Another type, known as a discretionary trust, could give you the ability to modify asset distribution over time, providing the flexibility you want in parts of your estate plan.
With a discretionary trust, your named trustee, the person responsible for managing the trust’s assets, has the discretion to release assets according to what they think is best for the estate and for the beneficiary.
Other benefits of a discretionary trust
Outside of flexibility, there are other benefits to a discretionary trust. These include:
- Providing tax benefits, since distribution of assets through a discretionary trust can reduce the tax burden otherwise associated with a large inheritance and it can decrease the size of your estate for estate tax purposes.
- Protecting a beneficiary’s eligibility for certain support programs.
- Ensuring that your beneficiary doesn’t spend away their inheritance too quickly.
- Giving you more control over how assets are distributed since you can name the trustee who will manage the trust.
Make sure you have a full understanding of what a discretionary trust can and can’t do for you so that you can make a wise decision about whether it’s a good fit for your overall estate plan.
Create an effective estate plan that suits your needs
There are several estate planning options at your disposal. To get the most out of your estate plan, you have to know the ins and outs of each of them. So, make sure you educate yourself as much as possible so that you can create the efficient plan you need to adequately provide for your loved ones and secure your vision of the future.