What is a discretionary trust?

A discretionary trust is a type of trust established in Texas to benefit an individual or group of people. It is set up to allow the trustee to decide how to distribute the trust assets at his or her discretion. This can help protect the assets from creditors or even future generations, as the trustee is not obligated to make specific distributions. Discretionary trusts involve three main parties: the grantor (the person who creates the trust); the trustee (the person charged with managing the trust assets); and the beneficiaries (the person or people who will benefit from the trust). The grantor sets up the trust and specifies what distributions the trustee is allowed to make. The trustee then has the power to decide how to distribute the trust assets among the beneficiaries, depending on their needs and wishes. Discretionary trusts are often used to provide long-term financial security for the beneficiaries. For example, the trust may provide funds to pay for college tuition, health care, or other expenses. Another common use is to protect assets from creditors. If the trust is structured correctly, the assets in the trust will not be subject to creditors’ claims. Overall, discretionary trusts are a powerful tool for estate planning. It gives you flexibility to provide financial security to those you love and protect your assets in the process.

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What is a discretionary trust?

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