Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Discretionary trust definition

What does Discretionary trust mean? A discretionary trust is a trust under which the trustees decide who, among a specified class of potential beneficiaries, should receive income or capital, in what amounts and when. No individual has a fixed entitlement; each beneficiary has a right to be considered and to ensure the trustees exercise their discretion lawfully. The trust deed may allow additions to or exclusions from the class, and is often supported by a non-binding letter of wishes from the settlor. In England & Wales and Northern Ireland, the concept is principally developed by case law (notably McPhail v Doulton on the “certainty of...

Template Client Explanatory Note: Discretionary Trust Key Provisions, Beneficiaries, Trustee Powers, Defaults, Administration and Inheritance, Capital Gains and Income Tax (England and Wales)

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Precedents

[ Your ] discretionary trust—[ name of settlor ]— [ explanatory note OR summary ]

This [ explanatory note OR summary ] outlines the key provisions of your Discretionary Trust. Please review this [ explanatory note OR summary ] and your Discretionary Trust carefully. If, after reading this [ explanatory note OR summary ] and your Discretionary Trust, you decide that any provisions of your Discretionary Trust do not accurately reflect your wishes, please inform [ me OR [ name of person to contact ] ] [ before you sign your Discretionary Trust ].

Parties

This clause confirms that you are the person creating the Discretionary Trust, known as the settlor, and that the initial trustees are [ insert names ]. As discussed, you should appoint only trustees you trust completely and who you are confident will work well together.
Background

The Background explains the circumstances surrounding the establishment of the Discretionary Trust. It also confirms the legal position that the Discretionary Trust is irrevocable, meaning that once created it cannot be undone...

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Web page updated on 22/05/2026

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