The nature of a discretionary trust

The following extract from Underhill and Hayton: law of trusts and Trustees aptly describes a discretionary trust:

“A trust is a discretionary trust where beneficiaries have distributive entitlements that depend on the exercise of discretionary dispositive powers vested in the trustees or other power-holders, a simple example being where property is given to trustees to distribute the income therefrom amongst such of A's children and grandchildren as the trustees see fit. Perhaps less obviously, a trust is also a discretionary trust where beneficiaries have fixed distributive entitlements that are defeasible by the exercise of a power to appoint the property to someone else, (Underhill and Hayton—Fixed and discretionary trusts [5.5])”.

Under a discretionary trust, trustees are given a discretion to pay or apply income or capital or both, to or for the benefit of all or any one or more exclusively of the others, of a specified class or group of persons.

When to consider using a discretionary trust

Where it is desired to benefit a large class of persons, the