What is a discretionary trust?

A discretionary trust is a legal arrangement that allows a person or organization to manage and control assets on behalf of another person or organization. In the context of disability planning law in Washington, a discretionary trust allows parents, guardians, or other legal representatives to manage assets for a person with disabilities in order to provide for their financial needs. These trusts are typically used when a person with special needs is not able to manage their own financial resources due to their disability. The trust typically allows the beneficiary to receive benefits from the trust in the form of goods, services, or income. The trustee typically has the flexibility to make decisions regarding how the trust is managed and what type of expenses can be covered according to the wishes of the grantor. The trust can provide tax benefits for both the grantor and the beneficiary. The grantor may be able to claim deductions related to income taxes, property taxes, and other contributions made to the trust. Beneficiaries may also claim deductions for medical costs and other expenses allowed by the trust. Discretionary trusts are an essential part of disability planning in Washington and can provide vital protection and financial assistance for persons with disabilities. They allow grantors to manage and protect assets for their loved ones and ensure that those with special needs are taken care of.

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