What is a discretionary trust?

A discretionary trust is a type of trust created by a grantor to provide for the management and distribution of assets to beneficiaries. It is often used to provide financial security for a child, family member, or other dependents in case of the grantor’s death. The grantor of a discretionary trust in Minnesota is the individual who sets up the trust and creates the trust document. The grantor can choose who the beneficiaries of the trust are, the assets that are held in the trust, and how the trust’s assets are managed. The grantor also appoints a trustee to oversee the trust. The trustee has the authority to make decisions about how the trust assets are distributed to the beneficiaries. The benefit of this type of trust is that it allows the grantor to determine who receives distributions and how much is distributed. The trustee can also have discretion to determine which beneficiaries will receive trust assets, based on their financial and emotional needs. This can provide added flexibility for grantors who want to make sure their beneficiaries are taken care of, even if the needs of the beneficiaries change over time. Although discretionary trusts are often used to provide for the care of minors, they can also be used to provide for the care of adults with special needs. Discretionary trusts can provide the grantor with more control over how trust assets are distributed and managed, and can also protect assets from taxation and creditors.

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