DISCRETIONARY

A discretionary trust is one where the trustees have wide discretionary powers as to the distribution of any income or capital to the beneficiaries. The settlor will identify within the trust deed a specified class of potential beneficiaries, e.g. the settlor, his/her spouse, their children and grandchildren, and the trustees will then decide who, from this class, should benefit and to what extent. The potential beneficiaries do not have an automatic right to enjoy any part of the trust’s property. It is usual for the settlor of a discretionary trust to provide the trustees with what is commonly referred to as a Letter of Wishes. Such a letter is not legally binding and whilst not wishing to hinder or fetter the discretion of the trustees, usually sets out the settlor’s intention behind the creation of the trust and how the settlor would wish the trustees to see the trust property dealt with.

Crossman Trust Company Limited PO Box 1, Portland House, Station Road, Ballasalla, Isle of Man, IM99 6AB, British Islands. Telephone: +44 (0)1624 825805 or 822816, Fax: +44 (0)1624 824570, E-Mail: mail@crossmantrust.com