Discretionary trust


(garytaylor47) #1

Can a discretionary trust be created with only one discretionary beneficiary named in the trust?
Provision would be made in the trust for additional beneficiaries to be added in the future.
Gary Taylor
Progressive Wills Ltd.


(Paul Saunders) #2

There is no reason a discretionary trust cannot be created with a single
object of the discretion. Clearly, though, there needs to be other
beneficiaries, or the potential for other beneficiaries to prevent a
bare trust arising, whether in income or on the trust fund generally.

If there is power to add beneficiaries, which cannot be defeated by the
death of that object, or of the settlor, that will help.

In any event, I would recommend the inclusion of both a power to
accumulate and a fixed default beneficiary (preferably a charity),
rather than having a resulting trust to the settlor’s estate in view of
potential tax complications

Paul Saunders


(PETER DOUBLE) #3

Whilst I tend to agree with Paul Saunders’s answer, you should clarify if the discretion is as to the amount or benefit that the single beneficiary can receive, or is it a discretion to be exercised amongst a group of beneficiaries. There obviously cannot be a discretionary trust if the distribution is planned to be amongst several beneficiaries and there is only one beneficiary, as then there is no exercise by the Trustees of their discretion. You must in such circumstances start out with at least two beneficiaries so that a discretion can be exercised.

Peter Double
Probate Resealing Services,


(Paul Saunders) #4

Whilst I agree with Peter Double’s assertion that there must be “at
least two beneficiaries so that a discretion can be exercised”, this
does not mean there has to be two objects of the discretion for a trust
to be effective.

If there is a power to accumulate, and the accumulations will
effectively accrue to the default beneficiary, upon the exercise of that
power there may be nothing over which the discretion can be exercised.
This does not invalidate the discretionary trust, and has been quite
widely used.

The only real problem arises if there is no fixed default beneficiary,
or the trustees fail to exercise the power to accumulate.

Paul Saunders