What is a discretionary trust?

A discretionary trust is an estate planning tool used by individuals with disabilities or long-term medical needs. It is a trust that is specifically designed to manage and invest funds for the benefit of someone who is not able to manage their own finances due to their disability. In New Mexico, discretionary trusts are established by a parent or other legal guardian for the benefit of a disabled person. The trust is usually funded by assets such as a home, stocks and bonds, savings accounts, and other property that the beneficiary may not be able to manage on their own. The trust serves to ensure that the beneficiary is able to receive the funds they need while protecting them from creditors and preserving the assets for their future use. The trust is managed by a trustee, who is usually chosen by the creator of the trust. The trustee is responsible for managing the beneficiary’s funds and making sure that they are properly invested and used for the beneficiary’s benefit. The trustee also has the legal authority to make decisions about how and when funds should be distributed. This gives the guardian the ability to maintain control over how the beneficiary’s money is used while ensuring that the funds are allocated in the best interest of the beneficiary. Discretionary trusts are an important component of disability planning law in New Mexico. They provide the disabled person with the financial protection and security they need while also allowing their guardian to maintain control over the funds.

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What is a discretionary trust?

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