What is a discretionary trust?

A discretionary trust is a type of trust created under Pennsylvania’s Disability Planning law. In a discretionary trust, the trustee has the authority to determine how and when funds and other property held in the trust are distributed to the beneficiary. The Trustee has the discretion to decide what type of distributions qualify as beneficiary payments and can decide when to make the payments. The trust may contain language that specifies the types, extent, or amount of distributions that the trustee may provide the beneficiary. For example, the trust document may limit distributions to items or services that are necessary for the beneficiary’s health, education, maintenance and support. The trust document may also specify the maximum amount of distributions that may be made. The trustee of a discretionary trust is responsible for exercising sound judgment when making distributions. The trustee must also keep accurate records of all distributions and investments made from the trust. This allows the trust beneficiary to keep track of the trust’s activity and be aware of how his or her money is being used. Finally, any assets placed in a discretionary trust are protected from creditors, judgments, and other debts. Therefore, the beneficiary can be assured that his or her assets are secure and will be used for their designated purpose.

Related FAQs

How long does it take to receive a decision on my SSDI application?
What documents do I need to apply for disability benefits?
What is the difference between a revocable living trust and a special needs trust?
What is a living will?
How often do I have to re-apply for disability benefits?
What is the Social Security Administration's appeals process?
What is a Guardianship?
What are SSA's guidelines for evaluating disability claims?
What is an advanced medical directive?
What is a special needs trust?

What is a discretionary trust?

Related FAQs

Related Blog Posts