The following Private Client guidance note Produced in partnership with Peter Murrin of Turcan Connell provides comprehensive and up to date legal information covering:
A discretionary trust or discretionary settlement is an arrangement created when an individual—or individuals—(traditionally the truster or trusters in Scots law albeit that the English terminology of ‘settlor(s)’ is becoming more commonly adopted) gifts, or settles, property to trustees, to be held for the benefit of one or more of a group of designed potential beneficiaries.
A properly constituted trust will have clearly stated trust purposes—the trust purposes will often be quite generally stated, eg ‘to administer and hold and apply the trust fund until the vesting day for the benefit of such one or more of the beneficiaries as they shall in their discretion decide’.
The trustees will have absolute discretion, subject to the terms of the relevant trust deed, over the application of the trust capital and income. The trusts are perhaps most associated with and often used in relation to succession and tax planning, asset and wealth protection, and support for family members.
A common misconception, reinforced to a degree by the changing world of compliance and financial regulation around trusts, is that a trust itself has a distinct legal personality. Ownership of the trust property following settlement rests with the trustees who hold the property in that specific capacity subject to the terms of the trust and for those being potential recipients of
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