What is a discretionary trust?

A discretionary trust is a type of trust that puts the control of its assets into the hands of a trustee. This trustee is responsible for determining how those assets are used. The primary purpose of a discretionary trust is to provide financial support to its beneficiaries. The trust document will typically recommend specific uses for the assets such as providing financial support, education, or healthcare expenses for the beneficiaries. However, the trustee is responsible for making the actual decisions on how the funds will be used. The trustee has the discretion to weigh the needs of all beneficiaries and make distributions as he or she believes best serves them. Discretionary trusts are commonly used in North Dakota. They can be set up by individuals for their own benefit, or by other individuals as a gift or legacy. The trust document will typically name the beneficiaries and the trustee, as well as the percentage or amount of assets each beneficiary will receive. The trustees of such trusts are legally obligated to act in the best interests of all the beneficiaries. Discretionary trusts provide a great deal of flexibility to the trustee in providing support to the beneficiaries. In addition, the funds are typically protected from creditors and estate taxes. This makes a discretionary trust an attractive option for estate planning and providing for loved ones in North Dakota.

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