What is a discretionary trust?

A discretionary trust is a type of trust created in the state of Virginia that allows the trustee (person responsible for managing the trust) to decide how to distribute the trust’s funds according to the needs and interests of the beneficiaries. The trustee has discretion to decide how to best use the trust funds, either for the benefit of the beneficiaries or for any other purpose that may help them. The purpose of the trust is to provide for the beneficiaries, not necessarily to benefit the trustee. Discretionary trusts in Virginia are often created as part of an estate plan. This type of trust is used to hold assets for the future benefit of beneficiaries. The trust document outlines the trustee’s responsibilities and duties, such as investing the trust funds, determining how funds can be distributed, and accounting for all income and expenses. The trust document also outlines the beneficiary’s rights and responsibilities in regard to the trust. A discretionary trust is also used to help reduce the tax burden of an estate. The trust fund’s assets are not subject to taxes because they are held in trust. However, beneficiaries may be taxed on any income they receive from the trust. Discretionary trusts can be beneficial to both the trustee and the beneficiaries. Trustees have the power to make decisions in the best interests of the beneficiaries, while beneficiaries have the assurance that the trust funds will be managed properly.

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